Zambia Zaire
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COUNTRY REPORT Zambia Zaire 2nd quarter 1997 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The EIU delivers its information in four ways: through subscription products ranging from newsletters to annual reference works; through specific research reports, whether for general release or for particular clients; through electronic publishing; and by organising conferences and roundtables. The firm is a member of The Economist Group. 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ISSN 1350-7087 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Redhouse Press Ltd, Unit 151, Dartford Trade Park, Dartford, Kent DA1 1QB, UK 1 Contents 3 Summary Zambia 4 Political structure 5 Economic structure 6 Outlook for 1997-98 9 Review 9 The political scene 12 The economy 13 Agriculture 14 Mining and energy 16 Foreign trade and payments Zaire 18 Political structure 19 Economic structure 20 Outlook for 1997-98 23 Review 23 The political scene 29 The economy 32 Quarterly indicators and trade data List of tables 8 Zambia: forecast summary (domestic) 9 Zambia: forecast summary (external) 15 Zambia: copper production and employment at ZCCM 32 Zambia: quarterly indicators of economic activity 33 Zaire: quarterly indicators of economic activity 34 Zambia: foreign trade 35 Zambia: direction of trade 35 Zambia: refined copper exports 36 Zambia: UK trade 36 Zambia: Japanese trade 37 Zaire: trade with major partners List of figures 9 Zambia: gross domestic product 9 Zambia: Zambian kwacha real exchange rate 22 Zaire: gross domestic product EIU Country Report 2nd quarter 1997 © The Economist Intelligence Unit Limited 1997 3 May 7, 1997 Summary 2nd quarter 1997 Zambia Outlook for 1997-98: Donors will continue to seek democratic commit- ments from the government. Opposition court challenges to the elections look set to fail. More dissent will emerge within UNIP. The government will seek good relations with Zaire’s rebel AFDL. Interest rates will fall further. Govern- ment action on money laundering is awaited. ZCCM horsetrading will intens- ify. The agricultural investment programme will continue to face problems, and the agricultural sector will restrict GDP growth. Inflation will slow and the currency outlook is more favourable, but the current-account deficit will re- main large. Review: Relations with donors have remained delicate. A controversial press bill has been suspended but continues to cause concern. A permanent human rights commission has been set up. The courts have steered a path between government and opposition. Factionalism has flared in UNIP. AIDS statistics are grim. Reactions to the budget have been favourable. Interest rates have fallen. Trading has increased on the LuSE. Non-traditional agricultural exports have grown, but gem exports have slowed. Agreement has been reached on Konkola Deep, while talks have continued on other ZCCM units. Copper prod- uction has fallen again. The IMF has approved further ESAF funding of $14m, and the EU has granted $200m over five years. Zaire Outlook for 1997-98: Mr Kabila is poised to take power but the extent to which he will collaborate with the Union sacrée opposition remains unclear, and secessionist tendencies may re-emerge. There is heavy speculation that Mr Mobutu may slip into permanent exile, but in any case he will soon cease to be a factor. The enduring ethnic dimension of the war will become a liability for Mr Kabila. The economy stands to gain from an end to the Mobutu regime. Review: The AFDL has captured Kisangani, Mbuji-Mayi and Lubumbashi as well as more than half the territory of Zaire, with assistance from Rwanda, Uganda and Angola. It is heading towards Kinshasa at a fast pace, unimpeded by the collapsing Zairean army. Elections for local officials have been held in most rebel-held areas, and administrative functions have resumed. Tens of thousands of Rwandan refugees remain in the country, and have faced persec- ution by Mr Kabila’s troops. Mr Mobutu and Mr Kabila have met face to face on a South African warship, but no firm peace deal has been reached. The AFDL has confirmed most existing contracts between foreign investors and the Zairean government in the mining sector. Crossborder trade has resumed with Uganda and Rwanda and tariffs have been reduced. Inflation averaged 659% in 1996, fuelled partly by new banknotes. Editor: Gill Tudor All queries: Tel: (44.171) 830 1007 Fax: (44.171) 830 1023 EIU Country Report 2nd quarter 1997 © The Economist Intelligence Unit Limited 1997 4 Zambia Zambia Political structure Official name Republic of Zambia Form of state Unitary republic Legal system Based on the 1996 constitution National legislature National Assembly; 150 members elected by universal suffrage; all serve a five-year term National elections November 1996 (presidential and legislative); next elections due in 2001 Head of state President elected by universal suffrage for a term of five years National government The president and his appointed cabinet (last reshuffle in December 1996) Main political parties The Movement for Multiparty Democracy (MMD) is the ruling party, with a huge parliamentary majority. The National Party (NP), Zambia Democratic Congress (ZDC) and Agenda for Zambia (AZ) also have seats in parliament. The former sole party, the United National Independence Party (UNIP), and several other opposition groups boycotted the 1996 elections and have no seats. There are over 30 parties in all President Frederick Chiluba Vice-president Godfrey Miyanda Key ministers Agriculture & fisheries Edith Nawakwi Commerce, trade & industry Alfeyo Hambayi Community development & social welfare Newstead Zimba Defence Ben Mwila Education Siamukayumbu Siamujaye Energy & water Suresh Desai Environment William Harrington Finance Ronald Penza Foreign affairs Lawrence Shimba Health Katele Kalumba Home affairs Chitalu Sampa Information & broadcasting David Mpamba Labour & social security Peter Machungwa Lands Dawson Lupunga Legal affairs Vincent Malambo Local government & housing Bennie Mwiinga Mines Christen Tembo Science & technology Enoch Kavindele Tourism Amusa Mwanamwambwa Transport & communications vacant Without portfolio Michael Sata Works & supply Keli Walubita Central bank governor Jacob Mwanza EIU Country Report 2nd quarter 1997 © The Economist Intelligence Unit Limited 1997 Zambia 5 Economic structure Latest available figures Economic indicators 1992 1993 1994 1995 1996a GDP at market prices ZK bn 569.4 1,613.7 2,486.3 3,521.7 4,979.7 Real GDP growth % –0.6 5.1 –3.1 –3.9 6.4b Consumer price inflationc % 197.4 189.0 52.3 35.8 43.8d Population m 8.67 8.94 9.20 9.37 9.65 Exports fob $ m 1,111 949 1,057 1,186 975b Imports fob $ m 1,301 950 928 869a 990 Current account $ m –117 –88 –185 –314 –491b Reserves excl gold $ m 150.0 192.3 268.1 210.5 150.0 Total external debt $ bn 7.00 6.82 6.61 6.85 7.00 External debt-service ratio, paid % 28.9 34.4 31.1 201.9 30.2 Copper outpute ’000 tons 432 403 354 308 311 Exchange rate (av) ZK:$ 172.21 452.76 669.37 857.23 1,203.71d May 2, 1997 ZK1,295:$1 Origins of gross domestic product 1995b % of total Components of gross domestic product 1995b % of total Agriculture 17 Private consumption 69 Mining 9 Government consumption 15 Manufacturing 37 Gross fixed capital formation 9 Construction 2 Change in stocks 3 Commerce 10 Exports of goods & services 20 Government & other services 25 Imports of goods & services –15 GDP at market prices 100 GDP at market prices 100 Principal exports 1996b $ m Principal imports 1993 $ m Copper 568 Crude oil 144 Cobalt 193 Fertiliser 30 Electricity 1 Main destinations of exports 1995f % of total Main origins of imports 1995f % of total Japan 18 South Africa 28 Saudi Arabia 13 UK 11 Thailand 13 Zimbabwe 9 India 5 Japan 9 a EIU estimates.