Meeting Summary Zambia s Political and Economic Prospects Honourable Minister Mrs Dora Siliya MP MMD Party Spokesperson and Minister of Education Mr Muhabi Lungu Director, Investment Promotion and Privatisation, Zambia Development Agency Chair: Tony Dykes Director, Action for Southern Africa 28th July, 2011 The views expressed in this document are the sole responsibility of the author(s) and do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/ speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event every effort has been made to provide a fair representation of their views and opinions, but the ultimate responsibility for accuracy lies with this document s author(s). The published text of speeches and presentations may differ from delivery.
Mrs. Dora Siliya: Note: Although the programme credits Mrs Dora Siliya as an MP and Minister of Education, she has not held that position since the morning of 28 July when President Banda officially dissolved both the Zambian Cabinet and Parliament. The Movement for Multi-party Democracy (MMD) has been in office for 20 years. It has actively campaigned for change from a one party state country and for plurality within the media. We see that citizens that have historically been harassed by government people want to be involved in participation politically. The main discussion is about change. The socialist model under President Kaunda and the United National Independence Party collapsed and this led to the deposing of the old government (the UNIP.) The government provided free education, free housing, water and other facilities and amenities. However, in the late 1980s we saw that the system was not stable anymore, ie the socialist economic policies were unsustainable. To hide this, the government continued to borrow. In the early 90s they borrowed from the IMF and from other governments in the West. There were food riots over basic commodities such as sugar. People had to queue for everything from bread to fuel. The subsequent years that the MMD came into power from 1991 to 2001 were difficult. There have been media reforms as well as structural change. There are now over 30 political parties in Zambia. We have over 50 radio stations, 5 TV stations. We are trying to create a new culture of government. 2001 ushered in President Mwanawasa, the second President of the MMD Party and the third President of Zambia. His focused on prudent economic management in order to deal with the political economy of the country. It took the country 14 years to deal with the debt inherited from the last government, and issues of accountability through the work with the IMF and others. In order to qualify for debt relief, wages for some in the public sector was frozen, risking losing the elections in 2006. But the government stuck its course. In 2008, the president died. There was a state funeral to pay for and we spent billions of Kwacha on the by-elections. Amidst all this, there was also the financial crisis. Copper (Zambia s greatest export) prices fell from a historic high of $8,000 a tonne to $2,000 a tonne. www.chathamhouse.org.uk 2
Having brought the reforms we ve had 12 years of continued positive growth. In the last three years we ve put two million children into school and added 30,000 teachers. The malaria mortality rate has been cut by 66 percent and 90 percent of Zambians suffering from HIV are on anti-retroviral drugs. Change is good. It s been brought through incremental changes. It s been felt. Zambians can feel the effects of the changes in policy. Zambia now has one of the biggest food baskets in the region. Food security has brought greater general security. The Rural Energy Development Programme has brought more access to energy in rural and remote areas. The reclassification by the World Bank of Zambia's status from a low-income to lower middle-income has helped with business, industry and lifestyle. With the middle class growing, we have seen companies establishing a presence in Zambia. It has brought in companies like KFC and the Japanese electronics company Hitachi. This has also created jobs for Zambians. Whilst all this has taken place, we've focused on upholding democracy. We're trying to make sure there is no abuse of power by ministers and officials otherwise they lose their jobs. Change is good but it has to be the right change. Mr. Muhabi Lungu: I'd like to begin with a quote by Edmund Burke: 'you must begin with the world as it is, as opposed to what you would like it to be.' We have to look at and understand the historical context that has brought about the change in the three years since 2008. It can be characterised by six major milestones of the economy: 1) In 2010, we saw the largest bumper harvest (maize, wheat, rice, cassava) in Zambia's history. 2) For the first time in more than 36 years we've had a copper surplus - 720,000 metric tonnes. In the pas few years we've yielded as little as 200,000 tonnes. Last year we had a total output of 800,000 tonnes. 3) The total value of our non-traditional exports was $1 billion. In 2005, it was as low as $300,000. That is a 7.6 percent growth in 2010, the highest in more than a generation. This is in addition to the 6.4 percent growth in 2009. 4) 2010 saw the lowest rate of inflation at 7.9 percent from 17 percent. It had been as high as 30 percent in the 90s. www.chathamhouse.org.uk 3
5) In 2010, we were able to implement total budget execution in a 12 month cycle. 6) We've been given a credit rating of B+ by three credit rating agencies. These things have given us the capacities to control the budget and the allocation of money. In 2008, of the 13.7 trillion Kwacha, 72 percent was from the domestic budget, with 28 percent from external resources. At the beginning of 2011 our total budget was 20.5 trillion Kwacha. That's an 80 percent increment in the size of the budget. Our last budget report showed that 82 percent of the budget was from the domestic budget and 7.7 percent through grant relief. We've taken full advantage of these economic circumstances and have sustained economic growth. We're working to develop the private sector through the Government Development Agency Act in order to improve schools, hospitals and roads. There are also new pieces of legislation, the Public Procurement and Public-Private Partnership Acts to strengthen these institutions and to help with other reform programmes. 118 licences have been abolished to help with funding and business investors. In business, last year we were ranked internationally at 76 out of 183 and only beaten in Africa by Mauritius, South Africa, Namibia and Botswana. We had been as low as 150. Since the launch of the 5th National Development Plan from 2005-2010 we've finished almost all the programmes on the list. From 2011 to 2015, we're going to upscale expenditure as well as move forward with infrastructure. Our vision is that by 2030 we will be a middle-income country. The size of the middle class should be larger. www.chathamhouse.org.uk 4
QUESTION AND ANSWER SESSION Question 1: The performance indicators show that Zambia is doing well, but has this change, as well as these major structural adjustments, affected society negatively to some extent, especially in terms of education? Question 2: What is Zambia's stance on Zimbabwe and its support for Libya? Question 3: What is Zambia's policy with the emerging markets such as China and India, as well the region? Mrs Dora: Through the Procurement Act, we have invested K500 billion in terms of building construction. This helps us to create jobs and wealth. But it's also about mental infrastructure engineering, a term I use to express the idea of changing mindsets. We're strengthening support for the private sector in order to generate revenue but also ensure that this wealth is redistributed. There were new initiatives in the 90s for example the liberalisation of transport has made the systems better. In the past people had to wait two weeks to get on the bus. People don't want that. There is currently a debate to privatise mines. Telecom companies like ZAMSA are privatised with two, three or four million subscribers, yet the parastatal telecoms are in debt, with 2,000 workers having to be subsidised by the government. All countries have bilateral relations with other countries, but primarily in terms of relations with Libya we are operating with the framework of the AU. Mr Muhabi: Just to add on what Dora has said - we might now be a middle income country but we still have a lot of poverty. We've reduced poverty from 80 percent to 64 percent and we are focussing on access to education, especially. www.chathamhouse.org.uk 5
These are not typical structural adjustments but new to Zambia, so the IMF and others had to adjust with Zambia. During the financial crisis those we traded with were sceptical. We had to say to the Germans (who we traditionally traded with) look, other guys are being more proactive. When our mines had to close down because of the financial crisis, instead of being helped by Australia and Canada, China and India were there to help. Question 4: What is being done to empower women in Zambia and encourage education? Mrs Dora: We are currently have a Higher Education Draft Bill, and were trying to encourage the participation of the private sector in order to have more sustainable financing for universities, both private and public. Skills were lost over the years, and traditionally, technical skills had to be imported from other countries. We're trying to create alternative routes in education that address this lack. When anyone talks about gender issues they often mean family issues. We have put specific programmes that affect women. Right now we have 12 female judges. We're proposing legislation for a new Constitution with an allocated 30 seats, of which 25 are for women and the others for the disabled and the youth. Question 5: How should Zambia be helped? What do you think is the most significant policy that has caused the biggest impact? Mrs Dora: I'd say the reforms we've had to create an environment of political freedom, to give Zambians the confidence to question and the platforms and structures to be heard. We're also looking into dual-citizenship as some Zambians find it difficult to travel or trade in business. Mr Muhabi: The Public Private Partnerships. In Zambia we have a 1.5 million deficit on housing. In construction, we need investors for energy, materials, etc. It's holistic, one thing, for example, energy touches other sectors. So we need www.chathamhouse.org.uk 6
adequate access to affordable credit. This is very significant. I'd say the Farm Input Support Programme. It has greatly affected the bumper harvest and it's affected a very great number of people. www.chathamhouse.org.uk 7