Zambia
Colonization of Zambia: During the colonization of Africa, the British colonized Zambia to make it a copper colony. The industrial revolution in Europe meant the demand for copper was growing rapidly. The copper mines were owned by British and South African capitalists, exploiting locals who provided the labour.
Strike: In 1935 was the first strike of Zambian mine workers. The “illegal” strike was spurred by poor accommodation, poor working conditions and unequal wages compared to white workers. In 1940, a more major strike led to the death of 17 people by the hands of the police.
Union: In 1948, the first branch of the African Mineworkers’ union is formed. The union fought both for better working conditions and against colonisation to end the exploitation.
Independence of Zambia: Independence and self-determination was finally achieved in 1964.
Social policies adopted: After Independence, the government of Zambia adopted a more equal economic model. There was large-scale nationalization of the mining industry, and the creation of large state-owned corporations. This period was relatively prosperous, as the earnings from mineral exploitation grew because copper prices increased. There were many textile manufactures, and schools and hospitals were being built in every region.
Price of copper decreases: However, the relative prosperity of the 1960s did not last. In the 1970s, the world price of copper went down considerably.
Price of oil increases: At the same time, the world price of oil was going up at a drastic rate.
Zambia borrows from the international banks: Zambia found itself in a difficult position. The country had no choice but to borrow money from overseas. Interest rates were low, because international banks had lots of money to invest, due to oil-producing countries having high profits.
Interests rates rise: In the 1980s however, the interest rate rose so high, to above 20%. The debt that had been created in Zambia in the 1970s ballooned. The country was pressured to pay back the money, while it was still in economic difficulties as the recession continued.
Zambia had to borrow again from IMF and the World Bank: In 1991, the country had to borrow more money from the IMF and the World bank as it could not support the debt burden.
Conditions on the loan: The IMF and World Bank accepted to lend money only under the condition that the country adopt neo-liberal policies. This meant:
- Cutting spending on public services, such as education and health care.
- Open the borders for external companies to come and take over Zambian companies.
- Lower the tariffs on imports (the price that companies need to pay to enter the country with their goods).
- Cut subsidies on local agriculture.
- Lower salaries.
Many companies collapsed, jobs were lost, and welfare programmes originally performed through a state-owned company were not continued by private companies.
Wages also were cut by nearly 40% during the 1990s. Today it is estimated that more than 90% of the labour force is in the informal sector. The level of unionization rate fell from 64% in the early 2000s to 38% in 2010.
Impact of neo-liberal policies:
- Tariffs were an important source of government finance before liberalisation. But now, without these revenues, spending on important economic infrastructure, such as transport and communications, was heavily cut.
- The removal of all subsidies on maize and fertilizer led to ‘stagnation and regression’ instead of helping Zambia’s agricultural sector. Devastating droughts in 1992 and 1994 deepened poverty in rural areas.
- Loss of job, low wages and hugely underfunded health care and education systems provided the place for an HIV/Aids pandemic, which had an enormous effect on life expectancy, which fell from 54 in 1990 to 33 in 2001, the lowest life expectancy of any country in the world.
Today, aid is tied to even more liberalisation. Recently, the government decided not to sell off the state-owned electricity company and the state bank. The IMF responded immediately by announcing that Zambia would lose US$1 billion in debt relief, if it did not go ahead with the privatisation. The government was forced to ignore its own Parliament and go back on its decision and privatise ZNCB.
Another condition for receiving debt relief has been to curb public spending. This has forced the Government to abandon plans to provide a living wage to public sector workers.
Since economic liberalisation, the government of Zambia has been displacing people to give land to foreign investors (grabbing land). Most of the time, the company does not compensate people properly for their land. Villagers are not left with enough land farm anymore, and lots of farmers will end up losing everything and moving to overcrowded cities to try and find a job.