Economic Freedom is never assured: Zambians should defend theirs

Lusaka could never be thought of as the most dynamic city, but in its quiet way Zambia’s capital has changed a great deal over the past decade or so. While life for ordinary Zambians has been gradually improving, sustaining these gains and extending and deepening much needed economic reforms is by no means a given. The recent Zambian elections may have been overshadowed globally by the epic struggle between Senators Obama and McCain, but were nonetheless important for many Zambians as they try to find the best route forward for a prosperous future.

Over the past 10 years, Zambia’s roads have improved, new shops have opened and hotels are full with businessmen and tourists. Overall the country has registered impressive economic growth over the past 7 or 8 years; at around 5% per annum according to the World Bank. And unlike some African economies, this growth hasn’t entirely been based on the extractive industries. According to the World Bank, the construction, telecommunications and tourism industries have grown impressively as well. It was not long ago that this country was considered the poorest on earth and an economy that is now creating more jobs and lifting people out of poverty was rotten and dying.

“Back in the ‘60s when the copper price was high,” recounted one Zambian I met, “the Government was able to pay for everything – and they did. Healthcare, schools including our school uniforms and lunches were paid for. Then everything collapsed and there was no private sector to supply these basic things.” This simple observation seems to prove the old adage that a Government that is powerful enough to give you everything is powerful enough to take it away (even when they have no intention of taking it away I would add).

The Zambian economic collapse, which was presided over by Kenneth Kaunda destroyed many lives. Basic diseases such as malaria that had been well controlled since the 1950s came roaring back so that it became the largest cause of death and disease. Malaria is a good bellwether for the health of an economy and its people. In man’s long history with this preventable and curable disease, wealth and malaria are negatively correlated. As countries develop and grow, the disease abates. This happened long before we even knew mosquitoes transmitted the deadly parasites. While Kenneth Kaunda’s leftist economic policies were in place, malaria claimed the lives of countless Zambians, robbing the country of its talent, reducing productivity and deterring investors. Since the late 1990s, as the economy has become freer, malaria has begun to decline.

According to the Fraser Institute’s measure of economic freedom, Zambia’s overall score of economic freedom improved from just 3.3 in 1990 to 7.13 in 2008. Over the same period Zambia’s rank among 141 countries improved from 109th to 42nd position. This slow movement to economic freedom wasn’t plain sailing – it was marred by the corruption of Kaunda’s replacement, Frederick Chiluba. However, Chiluba’s replacement, the late Levy Mwanawasa, vowed to root out corruption and also ensured a steady improvement in the level of economic freedom.

On most measures, Zambia’s economic freedom has increased so that now it is easier to start and run a business and to trade goods and services. The World Bank’s Doing Business report confirms that over the past couple of years, Zambia’s government has made life easier for businesses and entrepreneurs who create wealth and find commercial opportunities. Zambia’s trade and openness to investment has improved remarkably. The presence of Shoprite, Ocean Basket and many other South African brands stand as commercial monuments to the new openness to trade and investment. However, while South African businesses have seized opportunities in Zambia, so have Chinese companies, many of which are state run. Chinese investment, often characterised as a new form of colonialism, is reported to be widely unpopular and has become a rallying point for opposition political parties.

Anger against Chinese investors stems largely from the fact that Chinese workers tend to accompany the investment so that few job opportunities are available for local Zambians. In addition, several mining accidents causing the injury and deaths of Zambians has led locals to believe the Chinese investors care little for their safety and well-being.

However, aside from the specific instances of health and safety violations and the xenophobic reaction to foreign investors, which is a feature of many countries, Zambians should really be more worried about the influence that Chinese investment will have on ongoing reforms and freedoms in their country.

The recent polls saw the election of Mwanawa’s deputy, Rupiah Banda, as President. While he could continue his predecessor’s reforms and be less protectionist than his main rival, Michael Sata, this is by no means guaranteed. Concerns about the validity of the election should be setting off alarm bells in southern Africa. In fact serious questions have been raised about the last three Zambian elections, though when I saw SADC election observers whiling away the afternoon and drinking in the bar of a Lusaka hotel on Election Day, it was clear that Zambia’s neighbours would be turning a blind eye to any irregularities.

Zambia’s media is classified as Not Free by Freedom House and is dominated by the state. Journalists are sometimes harassed by police for doing their job and opposition parties have few opportunities to pursue their agenda. Without a free and vibrant media, it is easy for governments to hide their incompetence and to blame others for their own mistakes. Banda should therefore make media freedom a priority if he is to secure the gains made by Mwanawasa.

Along with a lack of media freedom are serious concerns about judicial independence and the impartiality of the courts which, according to the Fraser Institute, has declined in recent years. Without this fundamental institution, the road to greater freedom will be blocked.

While Zambians may care about a free press and impartial courts, the Chinese state companies may not. The danger with greater Chinese state investment, as with increased donor aid from
Western nations, is that the Government of Zambia will care more about the needs of bureaucrats and politicians in far away countries than with finding the right set of policies and institutions to encourage domestic growth and investment.

It is far from clear which path Zambia will choose and the economic freedoms gained over the past few years could well be lost if they are not rigorously defended.

Author: Richard Tren is a director of health advocacy group Africa Fighting Malaria. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the Free Market Foundation.

FMF Feature Article / 25 November 2008