Trade Tour - Introduction[ Biz/ed Virtual Developing Country ]

Introduction to the Trade Tour

In 1998 the total debt of Zambia corresponded to over 200% of its GDP and 500% of its export earnings. Paying back the debt and the interest on it means that much needed foreign exchange is not available for the many other uses that a LDC like Zambia needs. Breaking the cycle of poverty requires investment in infrastructure, fixed and human capital. Debt servicing directs capital flows out of the country into the banks of the MDCs and the multilateral agencies such as the IMF and World Bank.

The Zambian Kwacha
The Kwacha

How then did Zambia get into this dire situation? In the early 1970s it was one of the most prosperous countries in sub Saharan Africa. Its exports of copper generated large inflows of foreign currency and balance of payments surpluses. As with many countries that are dependent on commodities for their export earnings they are reliant on the market conditions over which they have little influence. Just an upturn in the market brings relative prosperity a downturn can cause economic crisis.

On the trade tour you will first visit the TAZARA railway in Lusaka where the current trading position of Zambia will be examined. As Zambia is a landlocked country a considerable amount of the country's exports and imports enter and leave by rail transport. The importance of this transport link to the economy cannot be overstated. With whom and what does Zambia import and export? You can look at the country's balance of payments accounts in the data section and see in detail Zambia's current trading position.

From there you will travel across Lusaka to the headquarters of COMESA, one of the two region trading blocs that Zambia belongs to. This section deals with trade protectionism and how and why barriers to trade are imposed and removed.

Finally you will travel to the Central Bank of Zambia which amongst its many responsibilities is to implement and monitor the structural adjustment programmes and macroeconomic stabilisation policies required by the International Monetary Fund and other bodies as conditions for external funding. The role of the IMF will be explored and the various trade policies that it supports will be considered.

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