Explaining Zambian Poverty: A History of (Nonagriculture) Economic Policy Since Independence

Abstract

AbstractDespite abundant resources, Zambia has some of the worst poverty in Africa. Much of the 1960s copper boom was wasted on an extraordinary expansion of the role of the state and attempting to industrialise. Public service wages and subsidies were no longer affordable once copper prices and tax collapsed in the mid‐1970s. Choosing to borrow rather than cut expenditure, fiscal deficits and debt became unsustainable as prices continued falling. Expenditure on basic services collapsed. The 1990s reforms stemmed the fiscal haemorrhage. Privatisation of the mines triggered a period of sustained rapid growth, boosted by rebounding copper prices. Along with debt relief, this brought macrostability and significant fiscal space. Although expenditure on basic services increased, much of the proceeds of the second copper boom were again wasted on uneconomic roads, agriculture subsidies and public service wages. Poverty reduction was limited to the urban population. Copyright © 2014 John Wiley & Sons, Ltd.