Despite Reforms, Zambia's Economy Falters

DROUGHT, political violence, and labor strikes threaten to derail structural reform in Zambia, one of Africa's most visible new democracies.

More than 30 strikes, walkouts, and slowdowns have hit banks, schools, and municipal services this spring, with labor unions demanding 600 percent pay increases. At the same time, Africa's worst drought in 100 years has devastated two-thirds of the corn crop.

Clashes between the ruling Movement for Multiparty Democracy (MMD) and the ousted United National Independence Party (UNIP) also have undermined public confidence in President Frederick Chiluba, who set out last fall to liberalize Zambia's debt-ridden economy.

The Carter Center in Atlanta will open a two-day conference June 11 with Zambian and Western officials to address economic recovery.

"We've yet to see a firm hand from Chiluba in defining his administration's priorities," a Western diplomat says. "There's only so long his apparent commitment to democracy will hold up without action to back it up." Shortly after his defeat last October of Kenneth Kaunda, who had ruled Zambia since independence in 1964, Mr. Chiluba took a number of steps to tackle a national debt that is twice Zambia's annual gross domestic product. He renewed relations with the World Bank and the International Monetary

Fund and revived the country's dormant program of economic reform. He also raised staple food prices nearly 200 percent and cut subsidies.

These measures were well received by lenders and aid donors. The Paris Club committed $1.4 billion; the World Bank raised its allocation to Zambia by $100 million, to $240 million.

BUT Western officials warn that famine could seriously undermine Zambia's reforms. Internationally competitive agriculture is a key component to Chiluba's reform program. Agricultural Minister Guy Scott estimates that Zambia will need to borrow about $300 million to buy corn to avert a famine.

In the effort to reform the economy, business leaders say Chiluba should stand firm on salary budget limits and push ahead with plans for privatization which they say is needed to attract foreign investment for Zambian mining and manufacturing. Market liberalization cannot include printing money for valueless wage increases, these business leaders say.

"Privatization is clearly the future of the Zambian copper industry and commerce in general," says Anderson Mazoka, managing director of the Anglo American Corporation. "The question is how viable will industry be in the future."

But labor leaders say Chiluba should guarantee workers a wage that reflects current costs of living and move cautiously toward privatization that may threaten jobs. Increased productivity cannot happen if consumers' purchasing power is reduced, they say.

"Workers cannot be expected to keep the wheels of industry running on empty stomachs," says Francis Kunda, president of the Miners' Union of Zambia. "We are convinced the failure of this government will not only be the failure of the labor union of Zambia, but also the failure of our unique democracy."

Government critics, including the Zambian Congress of Trade Unions, which Chiluba once chaired, accuse the government of strike busting and political intolerance. The ruling MMD has seized the offices of Kaunda's UNIP party, claiming that they were built with public funds.

Political observers say Chiluba has to move against corruption within his administration to sustain his credibility with the electorate and international donors.