INTRODUCTION The outlook for the Zambian economy remains favourable in the medium term, underpinned by robust growth

and single-digit inflation. The economy grew 6.9% in 2012, and is expected to pick up to 7.3% in 2013, while inflation should remain in single digits, at 8.0% and 8.5% respectively. The country, however, remains vulnerable to external shocks, with a sluggish global economic recovery a concern for its key mining exports. High youth unemployment and slow progress in poverty reduction may also overshadow the gains made from strong growth and limited inflation. (African Economic Outlook, 2013). Since independence, copper has been Zambias major forex earner that its economy has relied strongly upon it. When high world market copper prices started to decline in 1973, the Zambian economy did the same. The first and second Republics under President Kaunda (the first, from 1964 to 1973 characterized by multiparty democracy, and the second, from 1973 to 1991 characterized by the One-Party State) saw Zambia transition from a middle-income country to a least developed country, due to a combination of low copper prices, inflexible and state-controlled economic policies and high costs associated with Zambias being a prominent frontline state in the context of the liberation struggles in Southern Africa (GRZ, 2006). This essay therefore traces the various economic factors and policies that have affected Zambias economic performance from 1964 to date. It will be divided into three main parts: the first republic (1964-1972), the second republic (1973-1990) and the third republic (1991 to date). However, we shall begin by defining development and economic growth. DEFINITIONS OF DEVELOPMENT AND ECONOMIC GROWTH Development has many definitions due to its cross cutting nature. It is a multidimensional process that involves major changes in social structures, popular attitudes and national institutions premised on rapid economic growth, a reduction or eradication of poverty and overall gains in economic well being (Todaro and Smith, 2008). Economic growth refers to the steady process by which the productive capacity of the economy is increased over time to bring about rising levels of national output and income. It is the rise in the value of goods and services produced by an economy measured conventionally as the percentage increase in real Gross Domestic Product (GDP) or Gross National Income (Ranis et al, 2000; Todaro and Smith, 2008). From the foregoing definitions, there is arguably a clear symbiotic link between development
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and economic growth. One runs from economic growth to development while the other runs from development to economic growth. Economic growth is a necessary, but not sufficient, condition for development. It provides the resources to permit sustained improvements in human development through the allocation of national income to activities contributing to development. It further creates a reinforcing effect in which development itself can help increase national income of a country (ECA, 2005; Todaro and Smith, 2008). THE FIRST REPUBLIC (1964-1972) The country experienced modest growth in the real per capita gross domestic product over the period 1960 to 1972, which slackened thereafter. The countrys performance fell short of the average performance of all countries, that of the sub-Saharan African countries and the highperforming Asian economies. The country recorded impressive achievement in primary school education. Average life expectancy at birth grew steadily from 42.8 years to 50.5 years in the period 1980-84 after which it began to fall. The problems relating to governance, civil strife and geography also contributed to inhibit development in the manufacturing sector (Thurlow and
Wobst, 2004).

The first policy regime began after Zambia gained independence in 1964. The newly-established government opted for what was essentially a market economy. However, mining and urban areas were favored through import substitution financed by growing copper exports (World Bank, 1994). As a result of foreign investment in mining, Gross Domestic Product (GDP) rose rapidly at 5.1% per year during 1964-1972. Few people benefited from this growth however, particularly in rural areas (McCulloch et al., 2000). Accordingly, inequality, which was already high prior to independence, worsened over this decade. In the early 1970s the government broke from its market-driven policies, opting rather for state-control. The urban-bias was further entrenched in 1972 when the copper mines were nationalized as part of the newly-adopted strategy based on the establishment and expansion of state-owned enterprises. The fast growth of the late 1960s ended when world copper prices fell sharply in the early 1970s. Export earnings were eroded, placing considerable pressure on the current account. The government, believing this negative terms-of-trade shock to be temporary, borrowed heavily to lessen the sharp decline in imported consumer and investment goods. Foreign debt mounted rapidly while GDP growth dropped to
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0.5%. Rather than initiate a process of structural adjustment and encourage diversification, the government chose to adopt regulatory policies. Subsidies and fixed consumer prices protected urban consumption, while the mining sector and state-owned manufacturing were favored through import licensing and foreign exchange allocation. Growth remained unresponsive to this new interventionist strategy. For example, the Gini coefficient was 0.48 in 1959 and 0.59 in 1974 (World Bank, 1994). We should note that few years after independence in 1964, Zambia was one of the most prosperous nations in Africa. With a rich endowment of arable land, water and mineral resources, it held great potential for sustainable economic development. The new government of the United National Independence Party (UNIP) inherited very poor or inadequate infrastructure, including human capital, from the colonial regime. Initially, the government followed a fairly liberal political and economic policy, primarily focused on providing infrastructure and services to the majority of the people. However, after the implementation of the 1968 Mulungushi Declaration in 1972, the government switched to a more restrictive policy environment, with a heavy role for the state in national development. The state owned and controlled industry, with high tariffs imposed for protection. Consumption was heavily subsidized, prices were controlled and agricultural marketing and credit were provided by state agencies. A booming copper industry, Zambia's economic mainstay, encouraged state controlled policies. In the first ten years after independence, the nation experienced a growth averaging 2.4% a year, significantly lower than population growth thereby leading to declining per capita incomes ( Mwanawina, and
Mulungushi, 2002).

The state set up the Industrial Development Corporation (INDECO) to buy shares in private firms and to start investments in new areas. Later the mining companies were also nationalized under the 1969-1970 continued economic reforms, and a new body, an economic engine for Zambia, the Zambia Mining and Industrial Corporation (ZIMCO) was born. Its board was chaired by the President of the Republic of Zambia. The country also had the capacity to invest in new companies created under INDECO, as well as capitalization of the nationalized entities. On the average, the annual growth of the economy was about 11% which was very high. It was a normal practice at that time for many government departments and ministries to return money which was unutilized in the budget back to the treasury. Practically however, the policies of
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nationalization and the ideology of humanism made very bad environment for honest, open enterprise business in Zambia. It also marked the death of the spirit of individual self-reliance and enterprise and encouraged individual dependence on state resources. THE SECOND REPUBLIC (1973-1990) The economic problems for Zambia began in the last half of 1972, when the copper prices plummeted leaving little income in the nation to cover its budget and to expand and maintain the national infrastructure. As if the fall of copper prices was not enough, the oil shocks of 1973 made things worse, when the oil prices more than doubled, souring the countries import bill. This situation was exacerbated by the fact that Zambia is a landlocked country and the time she was the key frontline state in the region supporting the liberation wars of southern Africa. These factors required a change in economic policies, a drastic cut in national expenditure and a redefinition and redirection of national resources to basic national priorities for production and investment. These things did not happen. Additionally, this was supposed to be the right time for the country to start its structural adjustment when it national income could not cover the outlay of expenditure. This was also not done (Chanda, 2007).

One should observe that however that the first currency devaluation was done in 1973, in an attempt to adjust to the difficult economic situation. That year also marked the second short term borrowing the country had with the country had with IMF, the first one having been in 1971. The economic performance slide down began that time when the state could not invest more in production, and when the private sector was equally scared of investment, since nationalization and Humanism hang like a thick cloud over the country chasing away any private profitable investment. Instead of economic adjustments, came the famous Watershed Speech of 1975 which emphasized nationalization of any growing exploitative capitalist investment and distorted investment in land by pronouncing that land was valueless. Under pressure, Zambia turned increasingly to international multilateral and bilateral support. Some new policy guidelines were articulated in 1977 and 1978 was the year of economic take-off. These policy pronouncements were aimed at stabilizing the economy while making some attempted liberalization at the same time (Bigsten, Levin, and Persson, 2001).
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The early 1980s saw further attempts at macro-economic stabilization. The exchange rate system went through the crawling peg style of exchange, where the currency is fixed, yet floating with a bundle of international currencies. Under this system, the kwacha went through some devaluation. It is important to note that in the early 1970s the rate of the kwacha to the dollar was $1.50 to k1.00. The dollar was weaker than the kwacha. However, through these devaluations the kwacha was losing ground while the dollar and other currencies gained. Apart from the exchange rate other micro-economic factors were held fixed or where administratively controlled. By early 1985, it was necessary to make major policy adjustments in the exchange rate and other macro-economic measures in order to bring the international market value to the currency. A weekly currency auctioning system was started in 1980. The first auction on 11 th October, 1985 saw the kwacha devalued by 100% and the prices of most commodities went doubling beginning as it were with fuel. The limited policy measures of economic stabilization, such as the auctioning of the currency however, could not arrest and reverse the declining productive capacity of the economy. The parastatal companies were mostly operating below 30% of their capacities due to lack of foreign exchange to import spare parts and raw material inputs in their production processes. This meant economic decline and shortages of basic consumer goods like soap. Salt, sugar, mealie meal, as well as services like public transport. Threatened with a social-political eruption, the regime made a dramatic economic policy about turn on 1st May, 1987. The Structural Adjustment Programme (SAP) which was backed by the IMF and World Bank, with donor support, was abandoned. President Kaunda called it a killer programme that had brought untold misery to the people of Zambia. International products including coca cola stopped flowing into the country. A new economic recovery programme with local professional input was enunciated under the theme Growth from our own resources. Ideally a good spirited programme for the country to grow out of a self-imposed Structural Adjustment Programme. Unfortunately the government of the day did not have the political will and economic discipline that was needed to cut down on irrelevant national expenditure and re-direct resources to production. After two years of the growth from our own resources programme the countrys production system did not make any
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significant change and political governance was becoming difficult by the day. In June 1989, the country made an official re-approachment to the IMF and World Bank for the resuscitation of the Structural Adjustment Programme. Unofficial contacts had actually started way back in 1988. After June 1989, Zambia formally returned to the programme with the usual promise of foreign exchange, technical and donor support promised under this programme. However, the conditionalities were even more stringent because the country had lost both the time and resources needed to implement the programme (Bates, and Collier, 1993; Chanda, 1989). A National Conference (Indaba) was called in March 1990 to try and come up with a new political and economic programme to take the country out of the quandary it had found itself in. As usual the conference came up with many brilliant ideas on paper. On 13 th September, 1991 the World Bank suspended its support to Zambia. Meanwhile, the economic situation on the ground was worsening with no flow of foreign exchange or external finance, limited project assistance, ever increasing prices of goods. From the national conference of March 1990 and the food riots of June the same year, a political clarion call was sounded for multiparty elections and a new system of governance emerged. The presidential and general election were held n October 1991. A new political party the Movement for Multiparty Democracy (MMD) won the elections. FTJ Chiluba was the new President of Zambia (Bates, and Collier, 1993; Chanda, 2007). THE THIRD REPUBLIC (1991 TO DATE) In October 1991 the people of Zambia, discontent with the performance of the reforms thus far, elected the Movement for Multi-party Democracy (MMD) government. This marked the beginning of the third republic. The new government pushed liberal policies supported by the IMF and World Bank SAP, in anticipation of a more efficient private sector led economy. The state's role remained the creation of an enabling environment for private business. Trade, exchange rates and interest rates were liberalized, subsidies removed, agricultural marketing liberalized and most parastatals privatized. The invisible forces of the market were to determine prices for goods and services. On the other hand, the state started measures to reduce the blotted civil service to the right size, through retrenchment and voluntary separation. During its first ten years in power, the MMD government has committed itself to implementing these measures even faster than anticipated by other stakeholders. These measures have, however, failed to yield the
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desired goal - to make the economy grow so as to bring about prosperity in the nation. Instead, economic growth has been sluggish while poverty has continued the upward trend. Discouraged by the inadequate results of these policies, the MMD government has shown signs of retracting some of its earlier commitments. Privatization of the remaining utilities, such as the Zambia Electricity Supply Company (ZESCO), is uncertain while media reports indicate that government intention is to designate some of the remaining state enterprises, like the Zambia National Commercial Bank (ZANACO), as strategic industries. On the other hand government has introduced stringent interventions in the foreign exchange market to stabilize the depreciating Kwacha. In December 2000, the IMF and the World Bank allowed Zambia to qualify to the Highly Indebted Poor Countries (HIPC) Initiative. This means that the nation will now be allowed lower amounts of debt service than otherwise, while the debt stock is expected to be almost halved. Some groups like Jubilee 2000, though, still insist that HIPC debt relief is extremely inadequate and will certainly not solve the debt crisis for poor nations (Bigsten, Levin, and Persson, 2001;Mulikita, 2003). Zambias economic growth slowed to 6.6% in 2011 from 7.6% in 2010, mainly as a result of a weaker mining sector performance. However, the medium-term economic outlook appears favourable, underpinned by sustained expansion in agriculture, construction, manufacturing, transport and communications, and by a rebound in mining. Inflation is projected to remain in single digits, reflecting prudent monetary policy, while the objective of exchange rate policy is to maintain external competitiveness. Increasing domestic revenue collection remains a priority for the medium term and large infrastructure developments will require additional resources. The government plans to raise USD 700 million (US dollars) via a bond issue in 2012 to cover a funding gap for infrastructure projects. This infrastructure investment is expected to boost growth by up to 2 percentage points per annum. Risks to the outlook include Zambias vulnerability to external shocks and a sluggish global economic recovery, which could reduce demand for exports. Moreover, maintaining investor confidence has emerged as a key issue after the government reversed the privatisation of Zambias telecoms company (The World Bank Group, 2012). Zambias Development Strategy
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Zambias long-term development strategy is articulated in its own Vision 2030: A prosperous middle-income nation by 2030. To reach this objective, the Government of the Republic of Zambia (GRZ) has put into place a series of national development plans. The current Sixth National Development Plan (SNDP) was just released, encompassing 2011 through 2015. The SNDP has three overarching objectives: infrastructure development, rural development, and human development (USAID,). CONCLUSION The Zambian authorities responded well to the global financial and economic crisis. While economic growth has rebounded, there are long term and structural challenges that the country faces. These include the lack of diversification of the economy from the monoculture that currently is the case. At the same time, to ensure sustainable recovery, employment and decent work opportunities have to be available for the expanding population more so given the fact that poverty can only be addressed in a sustainable manner through decent work. The Global jobs Pact is a framework that Zambia can incorporate in its development programmes, and to support sustainable recovery. As indicated in the conclusions of the Oslo Conference, social dialogue is a vehicle towards consensus building in tackling the adjustment challenges related to exiting the crisis. By making use of enhanced social dialogue, Zambia should be able to address some of the major decades-long challenges, as well as the emerging issues that impinge on its development prospects. These include policies towards economic transformation and diversification, strong and job rich growth, poverty reduction, and better social protection, particularly for the vulnerable populations. The agenda of the Patriotic Front Government fits well with the vision of a new growth strategy hinged on elements of decent work, wealth creation and development for Zambia.
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Bigsten, A., Levin, J., and Persson, L. (2001). Debt Relief and Growth: A study of Zambia and Tanzania. Paper for WIDER Development Conference on Debt Relief, Helsinki, 17-18. August 2001.
Chanda, D. (1989). Currency Auctioning Revisited. In Ndulo, M, and Hwedie, Om (Eds), Unemployment in Zambia. Chanda, D. (2007). Forty Years of Zambias Independence: A Historical analysis of Economic Performance. In Chondoka, Y.A., Phiri, B.J., and Chabatama, C.M. (Ed), Zambia:Forty Years After Independence 1964-2004. UNZA. GRZ (2006). Fifth National Development Plan:2006-2011.Government Printers: Lusaka. McCulloch, N., Baulch, B., and Cherel-Robson, M. (20000. Poverty, Inequality and Growth in Zambia during the 1990s. Working Paper, Institute for Development Studies, University of Sussex. Mulikita, N. (2002) Reform and the Crisis in Zambia's Public Administration: A Critical Appraisal, Development Policy Management Forum, Ethiopia. Mwanawina, I. and Mulungushi, J. 2002. Explaining African Economic Growth Performance: The Case Study for Zambia, Global Development Network Draft Working Paper. The World Bank Group. (2012). Towards a New Strategy for Development, Decent Work and Development in Zambia. New Government Complex, Lusaka, May 21-22, 2012. National Conference. Thurlow, J and Wobst, P. (2004).The Road to Pro-Poor Growth in Zambia:Past Lessons and Future Challenges. DSGD Discussion Paper no. 16. Development Strategy and Governance Division. International Food Policy Research Institute, 2033 K Street, N.W. Washington, D.C. Todaro, M.P., and Smith, S.C. (2003). Economic Development, 8th ed. Pearson Education Ltd.:New Delhi. UNCTAD. (2006). Investment Policy Review: Zambia. UNCTAD:New York. Youth

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