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The current account has been in deficit for a long period, the deficit reaching a recorc level of 21 percent of GDP in 1985. From the mid-eighties, the performance of the external economy has improved, the current account deficit being turned to a smal surplus in 1991. The main fluctuations in the current account balance has been due partly to changes in the world market copper price and partly to variations in deb: service payments (section 2.4.). While Zambia used to have strong regulations or foreign exchange, and a policy of overvalued exchange rate, in recent years the country has moved to one of the most liberal foreign exchange regimes in Africa with an exchange rate that is based on market forces and appears to be balancing supply and demand.

Figure 2 The current account has been in deficit for a long period, the deficit reaching a recorc level of 21 percent of GDP in 1985. From the mid-eighties, the performance of the external economy has improved, the current account deficit being turned to a smal surplus in 1991. The main fluctuations in the current account balance has been due partly to changes in the world market copper price and partly to variations in deb: service payments (section 2.4.). While Zambia used to have strong regulations or foreign exchange, and a policy of overvalued exchange rate, in recent years the country has moved to one of the most liberal foreign exchange regimes in Africa with an exchange rate that is based on market forces and appears to be balancing supply and demand.

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From the peak around the mid-seventies, a number of industries began to contract and have continued doing so up until now. While the average increase in manufacturing output was 20 percent between 1975 and 1991, wood and wood products fell by 27 percent, metals and metal products by 23 percent, and chemicals by 22.5 percent. The only sectors with considerable growth were textiles and minerals. The latter sector, however, although doubling in size between 1975 and 1991, still accounts for a small share of manufacturing output. Textiles, growing by 400 percent between 1970 and 1985, have experienced more difficult times lately (among other reasons, because of cheap second-hand imports) and output fell by 15 percent from 1985 to 1991. goods and services. More importantly, the closure of the southern transport route created a surge in demand for domestic substitutes for manufactured imports. On the supply side, exports of mining products performed well, and therefore the imports of capital and intermediate goods were readily available and at a low price due to the over-valuation of the Kwacha. During most of the early period of 1965 to 1974, Government economic policy was relatively liberal while the public sector was expanding at a fast pace. Following the formal adoption of the one-party state in 1972, however, attempts to suppress the private sector became more deliberate.
From the peak around the mid-seventies, a number of industries began to contract and have continued doing so up until now. While the average increase in manufacturing output was 20 percent between 1975 and 1991, wood and wood products fell by 27 percent, metals and metal products by 23 percent, and chemicals by 22.5 percent. The only sectors with considerable growth were textiles and minerals. The latter sector, however, although doubling in size between 1975 and 1991, still accounts for a small share of manufacturing output. Textiles, growing by 400 percent between 1970 and 1985, have experienced more difficult times lately (among other reasons, because of cheap second-hand imports) and output fell by 15 percent from 1985 to 1991. goods and services. More importantly, the closure of the southern transport route created a surge in demand for domestic substitutes for manufactured imports. On the supply side, exports of mining products performed well, and therefore the imports of capital and intermediate goods were readily available and at a low price due to the over-valuation of the Kwacha. During most of the early period of 1965 to 1974, Government economic policy was relatively liberal while the public sector was expanding at a fast pace. Following the formal adoption of the one-party state in 1972, however, attempts to suppress the private sector became more deliberate.
Apart from the parastatal companies, most Zambian manufacturing enterprises are small. Of the 1013 firms in the food, textiles, wood and metal product industries, 636 had less than 20 employees, only 98 had more than 100 employees while 16 firms employed more than 1000 workers. The size distribution is particularly skewed in the wood and wood products industry, in which more than three quarters of the firms employ less than 20 workers. The small size of enterprises is an indication of the low degree of efficiency in much of manufacturing. On the other hand, the prevailing size distribution suggests the importance of economic reforms that benefits small-scale business.
Apart from the parastatal companies, most Zambian manufacturing enterprises are small. Of the 1013 firms in the food, textiles, wood and metal product industries, 636 had less than 20 employees, only 98 had more than 100 employees while 16 firms employed more than 1000 workers. The size distribution is particularly skewed in the wood and wood products industry, in which more than three quarters of the firms employ less than 20 workers. The small size of enterprises is an indication of the low degree of efficiency in much of manufacturing. On the other hand, the prevailing size distribution suggests the importance of economic reforms that benefits small-scale business.
The supply of social services, in particular health care and education, has deteriorated under the pressure of the general decline in government revenue. In addition, the health and education sectors, traditional "donor sectors", were especially hard hit by donor cutbacks. Consequently, government expenditures fell by 30 percent in real terms between 1984-91 (WB 1992). Education saw its share of the budget shrink from almost 17 percent in 1984 to less than 9 percent in 1990. The decline was especially The economic decline and the reduction in copper revenues after 1975 sharply reduced the Government's ability to supply public services, especially after access to the international capital markets was curtailed in the early eighties. Government's revenue position deteriorated further when donors became more and more reluctant to supply Zambia with support after repeated non-compliance with agreed adjustment programs. Government expenditure has generally been marked by large outlays on subsidies for industrial ventures (incl. Zambia Airways) and on defence, and concentration in the capital sphere rather than for recurrent operating facilities.
The supply of social services, in particular health care and education, has deteriorated under the pressure of the general decline in government revenue. In addition, the health and education sectors, traditional "donor sectors", were especially hard hit by donor cutbacks. Consequently, government expenditures fell by 30 percent in real terms between 1984-91 (WB 1992). Education saw its share of the budget shrink from almost 17 percent in 1984 to less than 9 percent in 1990. The decline was especially The economic decline and the reduction in copper revenues after 1975 sharply reduced the Government's ability to supply public services, especially after access to the international capital markets was curtailed in the early eighties. Government's revenue position deteriorated further when donors became more and more reluctant to supply Zambia with support after repeated non-compliance with agreed adjustment programs. Government expenditure has generally been marked by large outlays on subsidies for industrial ventures (incl. Zambia Airways) and on defence, and concentration in the capital sphere rather than for recurrent operating facilities.
account was consistently in surplus. In contrast, the service account was in deficit
account was consistently in surplus. In contrast, the service account was in deficit
Zambia's export receipts have long been dominated by metal exports. While expor concentration has fallen slightly since the early 1970s, it remains high by any standard, indicating that export diversification efforts have not been successful. Copper exports accounted for 85 percent of total export earnings in 1990, down from 96 percent in 1970. If one includes other minerals as weil, the share in total expor earnings were 93 percent 1990 (compared to 99 percent in 1970), the difference mainly due to cobalt exports.
Zambia's export receipts have long been dominated by metal exports. While expor concentration has fallen slightly since the early 1970s, it remains high by any standard, indicating that export diversification efforts have not been successful. Copper exports accounted for 85 percent of total export earnings in 1990, down from 96 percent in 1970. If one includes other minerals as weil, the share in total expor earnings were 93 percent 1990 (compared to 99 percent in 1970), the difference mainly due to cobalt exports.
Zambia's production structure has been highly dependent on imported inputs. This was a direct consequence of the tariff regime introduced after Independence to support import-substituting industrialization which was biased in favour of capital and intermediate imports. While Zambia started out with a much higher import-GDP ratio in the early 1970s, this fell sharply after the copper price bust in 1975, and despite Non-traditional exports seem to have suffered from official neglect because of the early dominance of copper exports. An over-valued exchange rate and fixed agricultural producer prices contributed to low export volumes, and consequently non- traditional exports remained a low and relatively constant share of total exports. After 1983, when the exchange-rate policy was significantly changed, with a relaxation of the foreign exchange constraint and export licensing and bringing the exchange rate more in line with underlying market conditions, the performance of non-traditional exports improved. Between 1988 and 1991, non-traditional exports grew at an average annual rate of 15.2 percent. The fastest growing exports over the period were processed food and primary agricultural commodities.
Zambia's production structure has been highly dependent on imported inputs. This was a direct consequence of the tariff regime introduced after Independence to support import-substituting industrialization which was biased in favour of capital and intermediate imports. While Zambia started out with a much higher import-GDP ratio in the early 1970s, this fell sharply after the copper price bust in 1975, and despite Non-traditional exports seem to have suffered from official neglect because of the early dominance of copper exports. An over-valued exchange rate and fixed agricultural producer prices contributed to low export volumes, and consequently non- traditional exports remained a low and relatively constant share of total exports. After 1983, when the exchange-rate policy was significantly changed, with a relaxation of the foreign exchange constraint and export licensing and bringing the exchange rate more in line with underlying market conditions, the performance of non-traditional exports improved. Between 1988 and 1991, non-traditional exports grew at an average annual rate of 15.2 percent. The fastest growing exports over the period were processed food and primary agricultural commodities.
After Independence, and continuing into the 1980s, enrolments in both primary anc secondary schools increased considerably. In addition, a policy on technical an vocational training was adopted in the late 1960s and followed through in the following years, with formal pre-service and in-service training at crafts, technician an technological levels in a network of technical institutions. The rapid numerice expansion of the education system has not been maintained since 1985, and thi gross enrolment ratio in primary schools has fallen since then. Parallel to thi development, there has been a strong decline in learning materials, such as books and new investment in physical infrastructure and/or rehabilitation of existin: infrastructure; in 1991, salaries and allowances accounted for 97 percent of the allocation for primary education and 65 percent of that for secondary (a further 2! percent of the secondary allocation covered boarding costs). Many of the program: secondary education. Domestic pressure and lack of finance seem to be among th main causes, but some 2 percent of the women are expelled from school each yea on the grounds of pregnancy. Labour legislation intended to protect women from har and dangerous labour, such as mines, or night work, had the effect of excludin women from various areas of employment. The Employment of Women, Youn: Persons and Children (Amendment) Act of 1991, removes the latter provisions an allows the women freedom to work in any industry. In the informal trading secto women have difficulties obtaining selling licenses, and leasehold to farmland is alst more difficult to obtain for women than for men.
After Independence, and continuing into the 1980s, enrolments in both primary anc secondary schools increased considerably. In addition, a policy on technical an vocational training was adopted in the late 1960s and followed through in the following years, with formal pre-service and in-service training at crafts, technician an technological levels in a network of technical institutions. The rapid numerice expansion of the education system has not been maintained since 1985, and thi gross enrolment ratio in primary schools has fallen since then. Parallel to thi development, there has been a strong decline in learning materials, such as books and new investment in physical infrastructure and/or rehabilitation of existin: infrastructure; in 1991, salaries and allowances accounted for 97 percent of the allocation for primary education and 65 percent of that for secondary (a further 2! percent of the secondary allocation covered boarding costs). Many of the program: secondary education. Domestic pressure and lack of finance seem to be among th main causes, but some 2 percent of the women are expelled from school each yea on the grounds of pregnancy. Labour legislation intended to protect women from har and dangerous labour, such as mines, or night work, had the effect of excludin women from various areas of employment. The Employment of Women, Youn: Persons and Children (Amendment) Act of 1991, removes the latter provisions an allows the women freedom to work in any industry. In the informal trading secto women have difficulties obtaining selling licenses, and leasehold to farmland is alst more difficult to obtain for women than for men.
employment grew faster than income and partly because the informal sector, which has higher wages on average because it includes most farmers, grew faster than the formal sector. For formal-sector employees, a number of social security benefits exist which protects them from the consequences of old age and iliness. The Ministry of Labour and Social Security has the overall coordination, and a variety of implementing agents exists. Although, at present, the coverage of the programs is lirnited to the formal sector, plans exist to extend coverage of pension schemes to the self-employed. implementation of the various schemes is weak, and enforcement of entitlements is
employment grew faster than income and partly because the informal sector, which has higher wages on average because it includes most farmers, grew faster than the formal sector. For formal-sector employees, a number of social security benefits exist which protects them from the consequences of old age and iliness. The Ministry of Labour and Social Security has the overall coordination, and a variety of implementing agents exists. Although, at present, the coverage of the programs is lirnited to the formal sector, plans exist to extend coverage of pension schemes to the self-employed. implementation of the various schemes is weak, and enforcement of entitlements is
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EconometricsForestryAccountingEconomic DevelopmentIndian Economic problemsMarket SegmentationExternal DebtInsuranceMoney marketsTrade Balance
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