Thursday, February 28, 2008

Capitalism booms but little change

International investors are toasting Zambia's fast-growing economy. The economy has recorded an annual growth of five percent for the past five years, inflation is in single digits and the kwacha has appreciated against foreign currencies. Zambia's growth has been fuelled by record copper prices on the world market. Copper accounts for over 80 percent of the country's total foreign earnings.
Last month, the Global Economics Weekly, an international business research publication, ranked Zambia as number one among the 10 most improved countries in the world, ahead of Argentina, Ghana and Russia, among others. President Levy Mwanawasa's administration has been widely praised by western donors for its pro-market policies, which offer foreign investors generous conditions. This is particularly true of the mining sector, where royalty tax is an exceptionally low 0.6 percent, firms are exempt from customs duty, and there is no ceiling on the amount of dividends or profits that can be repatriated. But the benefits seem hard to find in the working-class districts of the capital , Lusaka .

Economists and social rights activists point out that it is all yet to make a serious dent in poverty.
"...they tell us the economy is growing but to us life is still the same, prices of everything on the market are still the same, we are still poor, and we are still looking for jobs," Lusaka resident Agness Banda told IRIN.
The social indicators that reflect whether Zambians are really having a better life have remained stubbornly negative. The poverty rate, as measured by the government's Central Statistical Office, has been stuck at 68 percent for years; despite all the foreign investment, only 400,000 formal-sector jobs exist for a population of 11.7 million.
"There is no emphasis on equitable distribution of wealth from this growing economy," said Ivy Mutwale, acting executive director of the Civil Society for Poverty Reduction, an umbrella advocacy group.
Oliver Saasa, a consultant economics professor at the University of Zambia, said the impact of copper earnings had been negligible because of the lack of social investment.

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