Kitwe
The Importance of Copper to the Economy of Zambia
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The importance of copper to the economy of Zambia cannot be exaggerated. In 1998 the mining industry contributed over 9% of Zambia's GDP and it accounted for over 70% of Zambia's export earnings. Zambia's production was 347 tonnes out of a world total of 13401 tonnes. As a percentage this is 2.6% of world mine recoverable copper (Sources: United States: U.S. Department of the Interior, U.S. Geological Survey; Other countries: ABMS; Metallgesellschaft; CDA).However, the total exports of copper have decreased significantly over the last 20 years. The fortune of the copper industry seems to be changing.
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Under the government of President Kaunda the copper industry was seen as so central and strategic to the country that the mines and processing plants were nationalised. Copper production and refining was carried out by large state run organisations known as parastatals. During the 1970s when copper prices were high the economy of Zambia was booming and the parastatals were contributing much to government revenue. However, the resources of the government wore thin as they committed Zambia to political and military attempts to end apartheid in neighbouring countries. As a landlocked country they relied heavily on transport links to the Atlantic and Indian Oceans. Supporting the liberation movement in South Africa, Zimbabwe, Mozambique and Namibia made the export of copper very difficult. In addition to this the price of copper was starting to fall. The period of the 1980s was a time of great hardship for the Zambian people.
With the defeat of President Kaunda's government in 1991 and the adoption of a more outward oriented and free market approach to production the hope was that the copper industry could be revitalised but within a more diversified economy.
The hope is that the privatisation of the ZCCM and the other state owned mines and refining plants would result in the growth of the mining sector once more fuelling the engine of economic growth and development. The expansion of the copper industry will have a multiplier effect on the whole economy as the copper mines depend upon a whole range of ancillary services such as banking and insurance which will in turn grow. Will the boom times of the 1960s and early 1970s be repeated and more importantly be sustainable? Will the discipline and rigour of the free market ensure Zambia's mining industry runs efficiently? If it does will the resulting growth be accompanied by equivalent economic development?
Next issue - Over-dependence on Copper >>
Related Glossary Items:
Liberalisation
Inward Oriented Development
Outward Oriented Development
Import Substitution
Parastatals
Privatisation
Exchange control
Related Issues:
The structural adjustment policies of the IMF
Related Theories:
Supply Side Approaches
