RAKNER I Page 1 Wednesday, October 1, 2003 2:17 PM Political and Economic Liberalisation in Zambia 1991–2001 Lise Rakner The Nordic Africa Institute, 2003 RAKNER I Page 2 Wednesday, October 1, 2003 2:17 PM Indexing terms Economic development Economic reform Donors Political development Zambia Cover photo: Gisela Geisler A rally for the Movement for Multiparty Democracy (MMD) before the 1991 transitional elections. Language checking: Elaine Almén Index: Margaret Binns © the author and Nordiska Afrikainstitutet, 2003 ISBN 91-7106-506-7 Printed in Sweden by Elanders Gotab, Stockholm 2003 RAKNER I Page 3 Wednesday, October 1, 2003 2:17 PM Contents Acronyms . 6 Acknowledgements . 9 1. REFORM FOR POLITICAL SURVIVAL: POLITICAL AND ECONOMIC LIBERALISATION IN ZAMBIA 1991–2001 . 11 The Case of Zambia . 11 Political Liberalisation 1991–2001. 13 Economic Liberalisation 1991–2001 . 14 The Expectations: The Dual Reform Perspective . 15 The Argument: Zambia’s Dual Reform Experiences . 15 The Decline of Interest Group Influence. 16 The Increased Leverage of the MMD Government vis-à-vis Its External Partners . 17 Introduction of the Central Actors. 18 The Domestic Policy Game between Government and Interest Groups . 18 The External Policy Game between Government and Donors . 21 The Sources of Analysis . 24 Outline of the Analysis . 24 2. POLITICAL AND ECONOMIC LIBERALISATION IN THEORY AND IN AFRICA . 26 Interconnections between Political and Economic Liberalisation . 26 The Argument for Authoritarianism . 27 The Dual Reform Perspective. 28 Economic and Political Liberalisation in sub-Saharan Africa . 31 The Partial Reform Syndrome in Africa . 33 The Role of the International Donor Community in sub-Saharan African Reforms . 35 Dual Conditionalities as a Response to Reform Failure . 37 The Failure of Conditionality. 39 Analysing Political and Economic Reforms in Zambia. 41 3. POLITICAL AND ECONOMIC DEVELOPMENTS IN ZAMBIA 1964–1991 . 44 The Creation of a Developmentalist State Model. 45 Business Interests . 46 Agricultural Interests . 48 Labour Interests . 49 Political Consolidation: The One-Party State 1973–1991 . 51 The Developmentalist Model in a Declining Economy . 53 Economic Decline with No Response (1974–1983) . 54 External Pressure for Reform Faces Internal Opposition (1983–1987). 56 Home-Grown Reform Hampered by the Magnitude of the Crisis (1987–1991) . 61 Economic Crisis and the Birth of a Political Opposition Movement. 62 The Economic Policies Adopted by the Opposition . 64 RAKNER I Page 4 Wednesday, October 1, 2003 2:17 PM 4. ECONOMIC REFORMS 1991–2001: THE RELATIONSHIP BETWEEN THE GOVERNMENT AND DOMESTIC INTEREST GROUPS. 67 Economic Reforms in the First Chiluba Administration (1991–1996) . 67 Macro-Economic Stabilisation through Monetary and Fiscal Measures. 68 Liberalisation of Imports, Trade and Exchange Rates . 69 Institutional Reforms . 70 Agricultural Liberalisation . 71 Privatisation of State-Owned Industries . 72 Economic Reforms 1996–2001 . 73 Macro-Economic Stabilisation and Liberalisation 1996–2001 . 74 Agricultural Liberalisation 1996–2001 . 75 The Privatisation of the Zambian Consolidated Copper Mines . 77 Economic Reforms 1991–2001: Opportunities Lost . 78 Consultations between Government and Interest Groups 1991–2001 . 80 MMD’s Honeymoon (1991–1993) . 81 Political Consolidation (1994–2001) . 85 Agricultural Liberalisation and Responses from Interest Groups . 86 Business Responses to Trade Liberalisation and Privatisation . 90 Privatisation and the Trade Union Movement . 95 Economic Reforms and the Role of Interest Groups . 99 5. POLITICAL LIBERALISATION 1991–2001: THE DECLINE OF INTEREST GROUP INFLUENCE . 103 Political Developments 1991-2001 . 103 The First Election Period (1991–1996) . 104 Political Developments in the Second Chiluba Administration (1996–2001) . 111 Political Liberalisation and the Decline of Interest Groups . 117 Organisational Proliferation . 117 Party Developments in the Third Republic. 122 Executive Dominance and the Effects on Interest Articulation . 128 The Pluralist Paradox . 131 6. AID FOR REFORM: THE RELATIONSHIP BETWEEN THE ZAMBIAN GOVERNMENT AND THE INTERNATIONAL DONOR COMMUNITY. 134 Political and Economic Conditionality 1991–2001. 135 Economic Conditionality Exercised through the Consultative Group Meetings. 139 Political Conditionality Exercised through the Consultative Group Meetings. 148 Playing the External Game: The Leverage of the Zambian Government vis-à-vis Its External Partners. 154 Leverage in Economic Governance 1991–2001 . 154 Leverage in Political Governance 1991–2001 . 159 Ownership versus Conditionality . 167 Conditionality and the Partial Reform Syndrome . 168 7. POLITICAL AND ECONOMIC LIBERALISATION IN ZAMBIA 1991–2001. 171 Political and Economic Reforms 1991–2001 . 171 RAKNER I Page 5 Wednesday, October 1, 2003 2:17 PM The Economic Reform Record and the MMD Government. 171 MMD’s Economic Reform Record 1991–2001 . 173 Reform Implementation as Two-Level Games between Domestic and External Actors. 174 The Domestic Policy Game and the Decline of Interest Group Influence . 175 The External Game between Zambia and the Donors . 180 Executive Dominance and the Sustainability of Patronage Politics. 184 Neo-Patrimonialism—The Defining Feature of African Politics? . 185 Do Institutions Matter? . 187 Institutionalisation of Reforms . 188 Appendix 1: Informant Interviews. 190 Appendix 2: Chronology of Major Political Developments 1991–2001. 195 Appendix 3: Chronology of Major Economic Developments 1991–2001 . 202 Bibliography . 208 Index . 229 RAKNER I Page 6 Wednesday, October 1, 2003 2:17 PM Acronyms Afronet The Inter-African Network for Human Rights and Development AAC Anglo-American Corporation ACC Anti-Corruption Commission ACMP Agricultural Credit Management Programme ANC African National Congress ASIP Agricultural Sector Investment Programme AZ Agenda for Zambia BoP Balance of Payment BOZ Bank of Zambia CCC Committee for a Clean Campaign CDC Commonwealth Development Corporation CFB Commercial Farmers Bureau CG Consultative Group COMESA Common Market for Eastern and Southern Africa CSO Central Statistical Office CSPR Civil Society for Poverty Reduction CSUZ Civil Servants Union of Zambia DA(s) District Administrator(s) DAC Development Assistance Committee of OECD DFID Department of International Development DP Democratic Party EAZ Economic Association of Zambia ECZ Electoral Commission of Zambia EIU Economist Intelligence Unit ERC Economic Reform Credit ERIP Economic Recovery and Investment Project ESAC Economic and Social Adjustment Credit ESAF Enhanced Structural Adjustment Facility EU European Union EUEU European Union Electoral Unit FAO Food and Agricultural Organisation FDD Forum for Development and Democracy FFTU Federation of Free Trade Unions FINDECO Financial and Development Corporation FODEP Foundation for a Democratic Process FRA Food Reserve Agency GDP Gross Domestic Product GNP Gross National Product GRZ Government of the Republic of Zambia HIPC Heavily Indebted Poor Countries HP Heritage Party IBRD International Bank for Reconstruction and Development IDA International Development Association IDEA International Institute for Democracy and Electoral Assistance IFIs International Finance Institutions ILO International Labour Organisation’s IMF International Monetary Fund INDECO Industrial Development Corporation INESOR Institute for Social and Economic Research, University of Zambia IR Industrial Relations Act JCTR Jesuit Centre for Theological Reflection KCM Konkola Copper Mines KDMP Konkola Deep Mining Project LPF Liberal Progressive Front LUSE Lusaka Stock Exchange MAFF Ministry of Agriculture, Food and Fisheries MDP Movement for Democratic Process 6 RAKNER I Page 7 Wednesday, October 1,.