Africa

Zambia Business

According to Countryaah,  Zambia has significant natural conditions for economic development, both in agriculture and mining, including relatively good access to water – for both irrigation and power generation. Zambia is essentially an agricultural community, but a strong mining sector has contributed to a relatively high degree of industrialization.. The mining operation is based mainly on the country’s large copper reserves, and the mining in the Copper Belt has for decades been an important employer and contributor to the national economy. At the same time, the widespread dependence on copper as the one, dominant export item, made the Zambian economy subject to price fluctuations in the international markets. The price decline of copper from the mid-1970s caused considerable economic problems that spread to the whole of Zambian society. The belief in mining as a driving force for industrialization, especially in the 1960s and 1970s meant that the development of agriculture, which employs the majority of the population, was partly neglected. This in turn has contributed to poor social and economic development in the countryside, and to widespread poverty, although Zambia is normally able to produce its own food consumption. Declining revenues from the mining sector from the late 1970s also contributed to the decline of this sector as a result of declining reinvestments. Zambia went into a deep economic crisis, which was solved, among other things, through economic restructuring, under pressure from The World Bank and the IMF, from the 1980s, and with further liberalization – including privatization of state-owned enterprises – in the 1990s.

Gross Domestic Product (GDP) of Zambia

The economy is further weakened as a result of HIV/ AIDS. Zambia is one of the countries most severely affected by the epidemic, which among other things has led to a weakening of the workforce both in the modern sector and in agriculture, and which has contributed to further pressure on the health system as well as on families and communities.

The economic development since independence has been significantly influenced by regional political conditions, with wars in neighboring Angola, DR Congo (Zaire), Mozambique, Namibia and Zimbabwe, as well as the fight against apartheid in South Africa. Zambia joined the international boycott of the illegal regime in Rhodesia, 1965, and failed (until 1978) to export its goods through the country to shipping ports in South Africa. In the second half of the 1970s, the war in Angola caused the rail link to Lobito, and the port there, to be broken – and Zambia became dependent on connections eastward, through Tanzania. Zambia also welcomed a large number of refugees from neighboring countries.

Zambia is one of the countries Norway has had the longest, continuous development cooperation with at bilateral, state level – with status as a priority partner country from 1967. Zambia has for many years been the largest single recipients of Norwegian aid, through both direct cooperation and through multinational organizations.. Support for road development, water supply and agricultural development were early key sectors of cooperation; from the late 1990s, institutional development became dominant, with particular support for the development of governance and education, as well as natural resource and wildlife management. A number of Norwegian NGOs are involved in aid work in Zambia.

Tourism is a growing industry, and Zambia, together with Zimbabwe, including the Victoria Falls, manages as its main attraction.

Mining, energy

Zambia is rich in metals and minerals, and copper, cobalt, coal, lead, zinc, manganese, silver, iron, limestone and gemstones are extracted. The economic importance of the sector has dropped to a peak in the early 1970s, and accounted for less than 10% of GDP in the early 2000s., and employed approx. 10% of the working population. Industrial mining is run from the early 1900s, with lead, zinc and copper as the first products. The mines were nationalized (51%) in 1971, and in 1973 the government took full control of the two largest mining companies. These were merged in 1982 into Zambia Consolidated Copper Mines; the world’s second largest copper company – which was privatized in the second half of the 1990s: the company was split up and sold; the process was completed in 2000.

Zambia’s most important single metal is copper; Much of the country’s development has been linked to copper exports, which have accounted for over 90% of the country’s export revenues for a long period of time, before declining in the 1990s. The deposits have thinned out and production has decreased, partly due to lack of investment and maintenance. Earnings and profitability have decreased as a result of lower prices and lower productivity, as well as more expensive production. The largest mines are located in a 100 km long zone along the border of the Shaba region of DR Congo, known as the Copperbelt. The second most important metal is cobalt, but its products also vary with the fluctuations in international market prices. The extraction of jewelery stones increased in the 1990s, but a significant proportion of the production is carried out illegally. At Kabwe (Broken Hill), some lead and zinc are still being extracted, and in the eastern part of the country there are large reserves of phosphate. Zambia also has viable deposits of marble, partly of high quality. There are also smaller deposits of gold and silver.

Zambia has good conditions for the production of hydroelectric power. The country is self-sufficient and exports surpluses to Zimbabwe, Angola and DR Congo, as well as from 1998 to South Africa and Tanzania. Main power stations are located at Kafue Gorge, Lake Caribbean and Victoria Falls. Norway has assisted in the development of the country’s power sector. For large parts of the population, charcoal and firewood are still the most important energy sources.