CHAPTER 1 OVERVIEW ON ZAMBIA 1.1. Introduction Zambia is a landlocked sub-Saharan country sharing boundaries with Malawi, Mozambique, Zimbabwe, Botswana, Namibia, Angola, Democratic Republic of Congo and Tanzania. The country covers a land area of 752,612 square kilometers. It lies between 8 and 18 degrees South latitudes and longitudes 22 and 34 degrees East. About 58 percent of Zambia’s total land area of 39 million hectares is classified as having medium to high potential for agricultural production, but less than half of potential arable land is cultivated. The country is prone to drought due to erratic rainfall, as its abundant water resources remain largely untapped. Zambia has some of the largest copper and cobalt deposits in the world. 1.2. Land and the People Zambia’s population was first comprehensively recorded at 5.7 million in 1980. It increased to 7.8 million and 9.9 million in 1990 and 2000, respectively. The population has over the years remained young, with about 45 percent of the population below 15 years (CSO, 2000). The country’s average population density is 13 persons per square kilometer, while Lusaka Province (hosting the capital city of Lusaka) has the highest average of 64 persons per sq km. Although Zambia is endowed with many languages, derived from 73 ethnic groups, there are seven major languages that are used besides English for official purposes (such as broadcasting and dissemination of information). These are Bemba, Kaonde, Lozi, Lunda, Luvale, Nyanja and Tonga. 1.3. Politics and Administration Politically, Zambia has undergone phases of both multi-partism and one party rule. The country, which is a former British colony, gained its independence in 1964. Administratively, the country is divided into nine provinces namely Central, Copperbelt, Eastern, Luapula, Lusaka, Northern, North-Western, Southern and Western. These provinces are further divided into 72 districts. 1.4. Developments in the Zambian Economy Zambia’s economic policy regimes can be divided into four main periods. Free market policies (1964-1972): During this period, the Government pursued liberal economic and political policies, with little or no state controls, while placing focus on provision of infrastructure and services. High and rising copper export earnings boosted the economy’s capital stock. State Control defined the second period (1973-1984): By the mid-1970s Zambia was largely a public sector- led economy with excessive controls, parastatal monopolies, and a pro-urban, anti-agricultural bias. A large number of parastatals were established in mining, telecommunications, energy, finance, and agro-business. The Government actively supported industrialization by maintaining an overvalued exchange rate to promote imports of capital equipment and intermediate goods and by protecting local producers with high tariffs on finished goods. In 1974-1975 the Government began subsidizing maize, a practice that continued until the early 1990’s, with increasingly negative effects on the fiscal balance. The Government dramatically increased it’s foreign borrowing to compensate for the steep decline in the international purchasing power of copper in 1975. Community Developmental Issues 1 Economic transition (1985-1990): This period was characterized by the introduction of unsustained stabilization and structural adjustment policies. Significant socio-economic changes were undertaken during the period 1985-1988. In May 1987, the Government abandoned earlier agreements with the International Monetary Fund (IMF) and the World Bank and reimposed numerous controls, after political discontent resulted in food riots on the copperbelt province. In June 1989 the Government decontrolled all consumer goods prices except the price of Maize. Stabilization and structural adjustment (1991-2002): During this period the Government actively pursued policies that facilitate private sector growth, including price, trade, exchange and interest rate policies; financial sector liberalization; and more responsible fiscal and monetary policies. Agricultural output and input markets were liberalized, and significant privatization and other institutional reforms were undertaken. Despite substantial aid flows, Zambia’s economic performance has continued to decline, as indicated by various economic indicators. The average annual growth rate of GDP in the period 1970 to 1975 was 2.6 percent. It reduced to –0.9 percent in the period 1975 to 1990 and reduced further to –0.3 percent between 1990 and 1999. GNP per capita has not shown any improvement. Between the periods 1970 to 1975, 1975 to 1990 and 1991 to 1999, per capita GDP declined by –0.8, -3.1 and –7.2 per cent respectively (Economic report 2000). Table 1.1: Selected Macro-economic Indicators 1994 1995 1996 1997 1998 1999 2000 2001 2002 GDP at current prices (K’ Billion) 2,240.1 3,005.1 3,950.2 5,140.2 6,027.9 7,477.7 10,071.9 13,132.7 16,260.4 GDP at constant 1994 prices (K’ Billion) 2,240.1 2,176.9 2,404.9 2,360.2 2,412.7 2,499.0 2,499.0 2,621.3 2,707.9 Per capita GDP at current prices (K’000) 256 330 418 526 597 733 978 1,245 1,505 Per capita GDP at constant 1994 prices 256 239 246 246 233 236 242 248 251 (K’000) GDP growth rate (1994=100) -2.8 6.9 3.3 -1.9 2.2 3.6 4.9 3.3 Percentage contribution to GDP (1994=100) Agriculture 13.5 18.5 17.2 15.8 16.3 17.5 17.2 16.0 15.2 Mining 16.5 12.4 12.0 11.8 9.0 6.6 6.4 7.0 7.9 Manufacturing 9.8 10.0 9.9 10.1 10.5 10.5 10.5 10.4 10.7 Electricity 3.2 3.3 2.9 2.9 3.0 3.0 2.9 3.1 2.9 Construction 5.0 4.9 4.1 5.1 4.8 4.8 4.9 5.3 6.0 Wholesale and Retail Trade 14.8 13.6 17.0 17.2 18.1 18.5 18.3 18.4 18.7 Hotels, Bars and Restaurants 1.6 1.7 1.8 1.8 1.9 1.8 1.9 2.3 2.3 Transport and Communication 6.0 5.7 5.8 5.6 6.2 6.4 6.3 6.2 6.1 Financial Institutions and Insurance 8.2 10.0 8.6 8.3 8.5 8.6 8.2 7.8 7.9 Real Estate and Business Services 5.0 5.3 6.1 6.6 7.6 8.4 9.5 9.4 9.5 Community Social and Personal services 8.0 8.1 7.8 7.6 7.6 8.0 7.7 7.8 7.7 Less FISIM -4.7 -5.8 -4.9 -4.8 -4.9 -4.9 -4.9 -4.8 -4.7 Gross Value Added 87.1 88.0 88.1 88.1 88.5 89.3 89.1 88.9 90.0 Taxes on Products 12.9 12.0 11.9 11.9 11.5 10.7 10.9 11.1 10.0 GDP at Market prices 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Exchange rate (Kwacha /$US) 687.2 878.3 1,213.1 1,321.3 1,765.9 2,417.3 3,170.8 3,581.1 4,384.8 Inflation (%) 38.3 46.0 35.2 18.6 30.6 20.6 30.1 18.7 26.7 Exports of Goods and services (K’ Billion) 1994=100 806.5 673.5 718.5 856.4 905.2 1,146.5 1,546.8 2,033.6 2,488.0 Imports of Goods and services (K’ Billion) 1994=100 824.9 1,149.0 1,462.5 1,603.7 1,860.5 2,498.6 3,264.9 4,127.2 4,398.7 Source: Central Statistical Office 1.5. Developments in the Social Sectors The poor performance of the Zambian economy adversely affected the key social sectors namely the health and education sectors. These sectors have for sometime now heavily depended on Government funding. However, Government has been finding it difficult to provide adequate social services due to limited resources available. As a result, the provision of both the health and education services has not been sufficient to reach all the population sub-groups particularly the poor. Community Developmental Issues 2 By 1998, net primary school attendance rate was below 70 percent. By 2001, Net school enrolment ratios for primary and secondary schools were at about 76 and 11 percent, respectively. The incidence of malaria per 1000 population remained high at 394 by 2001. By 2000, under-five mortality rate was still high at 162 deaths per 1000 children. Infant mortality rates remained equally high at 110 per 1000 infants by 2000. The HIV/AIDS pandemic continued to ravage the Zambian society. HIV/AIDs prevalence rate was at 16 percent for the population aged 15 to 49 years old by 2002. Generally socio-economic conditions of the majority of the people had deteriorated so much that the Government and it’s cooperating partners decided to put together a Poverty Reduction Strategy Paper in 2001. Community Developmental Issues 3 CHAPTER 2 SURVEY BACKGROUND AND SAMPLE DESIGN METHODOLOGY 2.1. Survey Background The Living Conditions Monitoring Surveys (LCMS) evolved from the Social Dimensions of Adjustment Priority surveys conducted in 1991 (PSI) and 1993 (PSII), by the Central Statistical Office. So far, four Living Conditions Monitoring Surveys have been conducted. These are: - (i) The Living Conditions Monitoring Survey I of 1996 (ii) The Living Conditions Monitoring Survey II of 1998 (iii) The Living Conditions Monitoring Survey III of 2002/2003 and (iv) The Living Conditions Monitoring Survey IV of 2004 2.2.