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Zambia

Situation and cooperation

Young girls sell fruit at roadside, Zambia.

In the 1990s, Zambia underwent a radical transformation from a centralised one-party state to a democratic, free-market republic. This established the political framework for the country's further sustainable development. Today, Zambia is regarded as a comparatively stable democracy in southern Africa – even if deficits in good governance, the rule of law and respect for human rights still remain. Zambia is ranked 76th out of 167 nations on the international Corruption Perceptions Index (CPI) (79th in 2014, 88th in 2012, 101st in 2010).

When President Michael Sata died in October 2014 after a long illness, extraordinary presidential elections were held in January 2015. Edgar Lungu from the Patriotic Front (PF) won with a small majority. The next regular elections will be held in August 2016. Although the media can largely report freely and civil society enjoys freedom of expression, the Public Order Act from colonial times has been repeatedly invoked in the run-up to the elections to ban the opposition from holding meetings.

Economic development

Before 2014, growth in Zambia was at a level of roughly 6 per cent. However, since 2015, growth has been sluggish and a crisis has emerged with growth in 2015 hovering around 3.5 per cent. The local currency, the kwacha (ZMW), has depreciated by more than 60 per cent against the US dollar since January 2015. In December 2015, inflation reached 19.6 per cent and for food it was even 23.4 per cent. The budget deficit is growing, due in part to high exposure to foreign borrowing, with loans worth billions, and cost-intensive public subsidy programmes for energy, fuel and the agricultural sector. Public debt is 60 per cent of Gross Domestic Product (GDP). At the end of 2015, the government undertook some first consolidation measures. Preparations are under way for an International Monetary Fund programme. It will, however, probably not be spelled out in detail until after the elections.

In order to foster private investment, the general climate for financing, anti-corruption measures and infrastructure, and the framework for some legislation need to be improved. Compared with other countries in the region, however, Zambia's business environment is quite good.

Zambia is home to Africa's biggest copper mining and smelting industry. The Zambian economy’s heavy dependence on copper exports, however, makes it vulnerable to commodity price swings.

Roughly two thirds of the country's population is employed in agriculture. Agricultural development is of tremendous importance for income generation and poverty reduction. Experts reckon that Zambia could in fact produce significantly more food, including for regional export, as it enjoys favourable natural conditions. To date, however, only a small part of the country's arable land is being used for agricultural purposes; productivity is low and value creation negligible.

Zambia also has considerable potential to generate energy using hydro and solar power. The country has about 40 per cent of southern Africa's water resources; 95 per cent of electricity is generated by means of hydropower. As too little was invested in the energy sector in recent decades and the right framework is lacking (tariffs, for instance, are too low to cover costs), this potential is not being harnessed. In fact, the country is currently facing an energy crisis with several hours of power outages a day because of two years with low levels of rainfall and a lack of investment in energy infrastructure. The government is currently carrying out three major traffic infrastructure programmes, upgrading roads throughout the country. Many parts of the country, however, remain inaccessible, especially during rainy season. And many of the transit routes into neighbouring countries have not yet been sufficiently improved.


Social situation

Mother and child in Zambia

In spite of Zambia’s many years of economic success before 2014, the situation for the many people living in poverty has improved only slightly. Throughout the country, more than 60 per cent of the population still lives below the poverty line, in rural areas the rate is roughly 78 per cent. The economy is still too narrowly focused on copper mining, a sector that offers few jobs. Implementation of the essential structural reforms, in particular to improve conditions for the private sector, and the expansion of agriculture are advancing very slowly. There is a lack of sufficiently trained personnel and funds, especially at the local level of public administration. On the United Nations Human Development Index (HDI 2015), Zambia is ranked 139th out of 188 countries (164th in 2011).

The malnutrition rate in Zambia lies at 47.8 per cent, constituting a major obstacle to the country's development in general, even by regional standards. Imbalanced diets and chronic malnutrition lead to significantly impaired health and even long-term health issues for a section of the population.

The wide prevalence of HIV in Zambia is a huge issue for the country; 12.5 per cent of adults between the ages of 15 and 49 are infected. Average life expectancy has plummeted in the wake of the epidemic and stood at merely 41 years in the late 1990s. The availability of antiretroviral therapy has since brought it back up to 57 years. With the support of its international cooperation partners, the government is actively striving to fight HIV/AIDS, with some visible success.

The social and legal status of women in Zambia, not only in rural areas, is largely determined by traditions. Although gender equality is enshrined in the constitution and is being demanded by an increasingly active women’s rights lobby, social change is slow in coming. In 2014, the proportion of women in parliament was 11 per cent. Violence against women is widespread and government measures to combat violence and the oppression of women are insufficient.


Environment

Sunrise at the river Zambezi in Zambia

Zambia is increasingly struggling with the impact of climate change and is active in international fora to promote climate action. Precipitation patterns have become increasingly irregular, leading to more and more droughts and flooding. The current energy crisis is largely due to less rainfall, because hydropower is the main source of energy in Zambia.

Zambia's biodiversity is unique and conservation measures are urgently needed. Although the regulatory framework for environmental protection measures is in place, efforts to implement such measures still fail all too often due to the lack of political will and environmental awareness and because the relevant institutions are underfunded and lack capacity.

The dramatic level of uncontrolled commercial logging in Zambian forests is alarming. Large sections of the population are also contributing to deforestation as wood and charcoal are the sole source of energy for most of the population. Zambia now has one of the highest rates of deforestation in the world.

Zambia's large elephant population is under serious threat from poaching. The rhinoceros had been extinct in Zambia; efforts to reintroduce the species in the country have only begun in recent years. The spoil heaps from copper mining along with inappropriate management of toxic substances that are a byproduct of mining are sources of environmental pollution, especially affecting rivers and groundwater.


Development potential

Zambia has natural economic advantages. Besides copper, the country has ample other mineral resources such as cobalt and gemstones. It has about 40 per cent of southern Africa's water resources, a comparatively favourable climate, and also wildlife reserves, national parks and large tracts of as yet unused land suitable for agriculture.

The potential of the agricultural sector is especially high. So far, it only contributes 11 per cent to the country's gross domestic product but employs some 70 per cent of the population. A large part of the population depends on small-scale farming without the help of mechanical equipment such as tractors. Zambia's water resources, its fertile soil and temperate climate make for promising conditions to promote agriculture as a means to reduce poverty and malnutrition, which are common in rural areas in particular. At the same time, from a macroeconomic perspective, expanding the country's agricultural production offers an opportunity to overcome the one-sided focus on copper mining. Experts believe that Zambia could feed itself and even export agricultural goods. The Zambian government is therefore pinning its main hopes for growth on agriculture, but also on tourism and, as ever, on copper mining.

Another important area for growth is the construction industry. However, the risk here is that major infrastructure projects, especially road projects, are not sufficiently covered by the national budget and need to be financed by loans. This contributes to increasing public debt.


Priority areas of cooperation

Germany is one of Zambia's larger international cooperation partners. The German government committed a total of 121.5 million euros for development cooperation with Zambia for the period 2014 to 2016. Additional funds from the BMZ's special initiative ONE WORLD – No Hunger amounting to some 22.5 million euros are also available. General budget support ended in 2014 in mutual agreement by the Zambian government and all other donors of budget support.

At government negotiations held in November 2014, Germany and Zambia agreed to continue cooperation in the following priority areas:

  • Water supply and sanitation
  • Good governance (decentralisation, promoting public participation, good financial governance/public financial management)

In recent years two more areas were added:

BMZ Special initiative ONE WORLD – No Hunger:
Zambia is a pilot country for this initiative. The potential for the agricultural sector of the country, which employs the largest number of people, is huge. Several projects to promote cooperation between the private sector, civil society and public authorities with a view to facilitating agricultural innovation and fighting malnutrition are being supported. A green innovation centre is promoting skills and technological innovation for issues ranging from production to marketing focusing on two value chains, legumes and milk. Projects on agricultural financing enable farmers to take out loans to purchase seeds or tractors, for instance, and get training on financial matters and business management. Another project is aimed at fighting malnutrition. It is based on the international Scaling Up Nutrition (SUN) process and promotes local dialogue on its implementation.

Energy:
Economic development depends on reliable power supplies; the negative effects of Zambia's current energy crisis are a case in point. In the light of climate change, Germany wants to primarily promote renewable energies in southern Africa in the context of a regional approach. In November 2014, the German government committed to provide support for investment in renewable energies in Zambia for the first time. More programmes are being planned, including in cooperation with the private sector.

In addition, the BMZ has been supporting the Zambian government since 2013 by means of a small project to prevent HIV infections, with a special focus on young people.

The BMZ uses various instruments to support measures to strengthen local economic structures, such as partnerships between chambers, PPPs in the field of renewable energies, for instance, interventions involving DEG and the Senior Expert Service in Zambia are also supported.
In addition, Germany is providing support to Zambia under regional programmes such as the programme to promote the cotton industry in sub-Saharan Africa (COMPACI) and the Southern African Development Community (SADC).


Water supply and sanitation

Rural Water Supply in Zambia

Zambia has enormous water resources. And yet, 40 per cent of the rural population has no access to safe drinking water. Adequate sanitation services are available to only 42 per cent of the rural population and 60 per cent of city dwellers. Especially in the mushrooming peri-urban settlements, where the majority of the inhabitants live in poverty, sanitation services are often poor. Climate-smart management of valuable water resources is still in its infancy.

Germany has been a key supporter of the reform process to commercialise the water supply in Zambia and develop an independent regulation system. Through its involvement Germany is seeking to improve access to safe drinking water and appropriate sanitation facilities for the poor in rural and urban areas. This has so far benefited more than two million people. Fetching water is traditionally a female chore. If they have a shorter distance o go to get water, women have more time to engage in gainful activities and girls are more likely to be able to attend school regularly.

In the light of climate change, another focus of cooperation is on improving the sustainable management of Zambia's water resources. People need water, but it is also needed to generate energy, for agriculture, for mining, and for industrial and manufacturing purposes. In order to conserve valuable water resources for the country and the region in the face of climate change, good planning and cooperation between all stakeholders is needed. The necessary processes are receiving strong support through German development cooperation.


Good governance

German development cooperation plays a part in promoting good governance in Zambia as the basis for favourable economic development and successful poverty reduction. German development cooperation activities can be seen in the following areas:

Germany is supporting Zambia's efforts to implement its policy of decentralisation. By delivering services are at the local level, which is closer to the people, poverty reduction and political participation can be improved. Last year, Zambia's government took critical steps towards decentralisation; however, implementation will take time. The measures implemented through German development cooperation focus on advising the relevant government ministries and selected districts on issues such as budget planning, financial management, regional planning and service orientation.

In the field of public participation, Germany is helping to strengthen civil society partner organisations and networks with a view to enabling them to play a more effective role in shaping decision-making processes. Development cooperation has been instrumental, for instance in launching a constructive dialogue between civil society and the government on a disputed registration law for non-governmental organisations. Together with the EU, efforts are being made to improve the access of poorer people, in particular, to justice. The Friedrich Ebert Foundation is involved in informing the people about the role and work of parliament and in strengthening parliamentary governance.

Zambia's budget planning, implementation and auditing is often not sufficiently systematic and structured. Public revenue is low, corruption and clientelism are rife. Through development cooperation projects on good financial governance, Germany is providing advice to the Ministry of Finance and the Zambian tax authority on managing public funds and increasing tax revenue.


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