Flashback: How IMF nice statistics impoverished Zambia under Chiluba

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The Zambian economy has collapsed heavily as a result of World Bank and IMF intervention, a major study published in 2004 reveals. The reforms forced on Zambia by the World Bank and the International Monetary Fund (IMF) have “directly resulted in making tens of thousands unemployed, destroyed key industries, caused extensive social unrest and increasing poverty,” says a report
published by the World Development Movement (WDM), a leading London-based non-governmental organisation.

See the full report here

The report ‘Zambia: Condemned to Debt’ charts in detail how “sweeping trade liberalisation, deregulation, dismantling of the public sector and massive privatisation” has led to a drop in Zambia’s UN human development rankings from a still poor 130 (but which made it one of the most developed countries in sub-Saharan Africa in 1990) to 163 in 2001.

The report points to a near all-round decline as a result of IMF-World Bank policies.

And while this report looks at Zambia, the situation is similar in several other African countries, the WDM says. “Our case study of Malawi last year and of Senegal led us to very similar conclusions but to a different degree,” Dave Timms from WDM told IPS. “Similar policies of the IMF and the
World Bank are leading to similar outcomes.” But Zambia which took to democracy fairly early and has not been at war is “one of the worst and one of the most clear-cut cases of the failure of IMF and World Bank policies,” Timms said.

The impact of the policies in some areas has been dramatic, the report shows. Lowering of import tariffs on textile products and the removal of tariffs on used clothes brought large-scale import of cheap second-hand clothing, the report says. The result is that from more than 140 textile
manufacturing firms in 1991 the number fell to just eight by 2002.
Employment in this sector fell from 34,000 to just 4,000. “We used to supply retailers with three and a half thousand tonnes of clothing annually, we’re down to less than 500 tonnes now,” Ramesh Patel from a textile company is quoted as saying. The firm that employed 250 people eight years ago now
employs 25, he said.

The report documents several startling facts about the falling Zambian economy. Between the early seventies and late eighties Zambia’s external debt rose from 814 million dollars to 6,916 million dollars. By the start of last year Zambia had received only 5 percent of the debt service reduction
committed to it under the Heavily Indebted Poor Countries (HIPC) initiative, the report says. This initiative is being used as “another lever with which the IMF and World Bank can wield influence over Zambia’s economy,” it says.
In return for debt relief the IMF and the World Bank are making policy interventions on deregulation, privatisation, lay-offs, freeze in wages and reduced state support to the agricultural sector, but the record in these areas is one of “dismal failure.”

The report points out that the World Bank itself had acknowledged in 2000 that removal of subsidies on maize and fertiliser had led to “stagnation and regression instead of helping Zambia’s agricultural sector.” The “one-size-fits all privatisation programme” has improved the running of some
failing state-run economies but “many companies have collapsed, jobs have been lost and welfare programmes have not been continued by private
companies.”

The report quotes Zambian President Levy Mwanawasa as saying last year the IMF privatisation programme has “been of no significant benefit to the country’s privatisation of crucial state enterprises has led to poverty, asset stripping and job losses.” Zambia’s real gross national income (GNI) has fallen from 1,455 dollars in 1976 to 892 dollars by 2000, the report
says.

“Not surprisingly, employment has suffered,” it says. “Formal manufacturing employment fell from 75,400 in 1991 to 43,320 in 1998. Paid employment in agriculture fell from 78,000 in 1990 to 50,000 in 2000.”

The failed policies have led to widespread dissatisfaction, the report says. The government was asked to privatise the state electricity company and state bank in return for debt relief. The government cancelled the move at first following a major protest march in state capital Lusaka but then had to reverse its decision under pressure from the IMF and the World Bank.
Zambia had been told that it could not increase its fiscal deficit from 1.55 percent to 3 percent. That contrasts with a U.S. budget deficit of 3.4 percent projected to rise to 4.1 percent this year. “It is time to cancel Zambia’s debt and fundamentally rethink the role of the IMF and the World
Bank,” the report says.

“It is not acceptable that these institutions have effective control over policy-making in countries like Zambia. Policies need to be developed which are genuinely home grown alternatives that put the Zambian people, especially the poor, first.”

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14 Responses to Flashback: How IMF nice statistics impoverished Zambia under Chiluba

  1. Where were the citizens of this country when all this was happening?. Docile Zambians,weak like a leaf. Can be blown in any direction all in the name of peace.Its time we start waking up.You have heard that PF caders are using guns but you are quite.even try and find out whether its true,Zero. Thats why sata will take us 50 years back because he knows how docile we are.He can even buid his retirement home before he even earns it and we are quite. Like KK used to say and I quote,”STUPID zambians” indeed we are.

    X man - November 8, 2012
    10:27

  2. It is refreshing that an independent report on Chiluba’s period is being issued. We already have the World Bank and IMF reports that gave kudos to the policies that the two institutions imposed on Zambia with deadly consequences. Deadly because the policies created poverty that killed and is still killing hundreds of people every day.

    The Wbank and the IMF employed local agents at all levels of government and public service to drum up support for policies and programmes that were criminal in nature and intent. Those agents are today the richest people in Zambia! May we pray that one day, these agents will be exposed. May God’s name be praised!!

    Bambo John - November 6, 2012
    17:50

  3. Appetite foe Nkongole by this GRZ is taking us straight into HIPC.

    John Chinena - November 6, 2012
    16:02

  4. How many of you remember Structural Adjustment Programme (SAP) in the 90s, watch the space.

    John Chinena - November 6, 2012
    15:38

  5. World Bank and IMF have seen an opportunity in this regime to make sure they misdirect the visionless leadership to push the economy to the slope. After that they may bring suggestions to keep their hands on the governance systems. What else.

    Mesu a'kawa - November 6, 2012
    14:56

  6. When i ready the article in the morning, i asked myself who this IMF Is and what method they use to determine a countrys well doing economy. Do IMF think zambian are so dull to evaluate their own economy? Please IMF we know u can fool unlearned pipo like Our CNP Ukwanomic,but not all zambian. Go to hell with your praise.

    Chilufyanya Satana - November 6, 2012
    13:56

  7. IMF thrive on indebtedness, disenfranchisement and austerity measures on poor countries and their voicelessness citizens. IMF has not made any country richer – am yet to hear of it! They are the modern day slave masters – period!

    Rio - November 6, 2012
    13:40

  8. Sata has always been involved in bringing this country down as is the case from 1991 to 2000.things were about to normalise from 2001 to 2011 but alas,he is back at the helm.brace for hard times

    Mr Kiss - November 6, 2012
    12:33

  9. They know sata is moving in the wrong direction but to their benefit so they will praise him for anything.

    Wasted5Years - November 6, 2012
    10:27

  10. IMF survive and thrives on the poor nations by manipulating policies so that IMF can benefit in the end! So never take them seriously always. They are in business!

    Mubanga - November 6, 2012
    10:20

  11. OH YES IMF IS A DEADLY LAIR. IMF IS A DECEIVER. ONCE IMF BEGINS TO MAKE STATEMENTS ABOUT A COUNTRY’S ECONOMY, THEN JUST KNOW THAT THEY ARE COMING TO DESTROY THAT COUNTRY. IN THIS CASE ZAMBIA.

    COONDE - November 6, 2012
    10:18

  12. its a problem of being a berger. Chiluba was in a hurry to develop Zambia and as such overlook certain parameters that were essential in the future. LPM tried to withstand pressure from these institutions but fell prey when he sold ZANACO to Rabobank. we need strong leaders who will say give us your money but on our terms of expenditure! imagine yo borrow money form your neighbour who gives you terms that unless you buy a shoe instead of mealie meal, in wont give you the money? these are detrimental policies we should guard against! we have to look at entrepreneurship, manufacturing, agriculture and tourism if we have to reduce unemployment! however, this would not be realised without education and health!

    enlightened - November 6, 2012
    10:14

  13. IMF IS A BIG DANGEROUS RED DRAGON, JUST LIKE SATA AND HIS PF GOVERNMENT. IMF OBJECTIVE IS TO SEE SUFFERING IN AFRICAN STATES BY AFRICANS. THEIR GROSS MISCONDUCT IN MISGUIDING AFRICAN POLITICIANS AND LAW MAKERS IS A SERIOUS CRIME AGAINST HUMANITY BY IMF. THEIR COSMETIC APPLAUDS FOR ZAMBIA’S ECONOMIC PERFORMANCE IS NOT WELL MEANING. IMF IS DEADLY AT DESTROYING EMERGING AFRICAN ECONOMIES. ZAMBIANS DO NOT NEED AN IMF REPORT TO TELL US WHETHER ZAMBIA IS DOING WELL OR NOT WE ALLCAN SEE WHAT IS GOING ON IN ZAMBIA. WE SEE WASTAGE OF RESOURCES BY THOSE IN POWER. WE SEE CROSS ABUSE OF POWER BY SATA AND HIS PF GOVERNMENT. TO HELL WITH YOU IMF. TO HELL WITH SATA.

    COONDE - November 6, 2012
    10:13

  14. ukwa was number three at that time and he is directly responsible for zambia’s collapsed economy.

    Bwalya chiselema - November 6, 2012
    09:54