Zambian Economy: Poverty levels to remain high in 2016Poverty levels in Zambia will remain high after the 2016 elections and for years to come if the current neo-liberal capitalist system is not changed. Our prevailing economic order is primarily designed for maximization and repatriation of profits by big foreign investors and allows – to a lesser extent – some limited space for domestic capital accumulation. Workers, peasants and the poor are incidental under this arrangement – they are not and will never be the primary focus of this economic system. Zambians can vote out the PF government on the 11th August 2016, but should not expect poverty levels to change if the underlying economic system remains intact. The poverty of the Zambian masses has more to do with structural exclusion from participating in their own economy and less with the prospects for macro-economic stability or GDP growth.

Indeed, 2016 will remain a difficult year for the Zambian economy.  Low copper prices, increasing interest rates on the international capital markets, the country’s high debt levels, fiscal indiscipline on the part of our government, power shortages, and unfavorable weather conditions are all adding up in diminishing Zambia’s growth prospects. A GDP growth rate of maximum 4% could be the best we should reckon with. This is too low to effect significant positive changes on a broad scale. Further, the drivers of this growth will not include agriculture and mining – the two most important sectors in impacting on poverty reduction and foreign exchange earnings. The Kwacha will therefore remain strained; inflation will be difficult to contain – effectively raising the cost of living and doing business in the country. Under this scenario, poverty reduction, with or without the pending elections, is out of question even for those who believe in the myth of a “trickle down” theory.

GDP growth and macro-economic stability are nevertheless a pre-requisite for poverty reduction. But this is only under the condition that the masses of the population are key economic participants in the economy. The factor prices of the poor (i.e. wage rate), and their product prices (i.e. commodity and service prices) have to increase as the GDP grows. However, this has been the complete opposite in Zambia for more than a decade now. The wage rate and product prices have stagnated and in some cases declined. This explains the GDP growth that was experienced for some years amidst constant high poverty levels. Again, the Zambian version of neo-liberal capitalism is crude and backward. The poverty of the masses is treated as “collateral damage” on the path to maximize profits and accumulate wealth for a few.

However, with more people becoming jobless and high inflation eroding household budgets, and the rain-dependent peasant agricultural compromised by poor weather conditions, poverty will be exacerbated in 2016.

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