Caleb M Fundanga: Zambia’s economic outlook - what have we learnt in the last 40 years and where do we go from here? Paper presented by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the CIMA Zambia annual business discussion on the theme “Zambia’s economic outlook - what have we learnt in the last 40 years and where do we go from here?”, Lusaka, 7 January 2005. * • • • •  *  *  Mr Chairman The President of CIMA Zambia, Mr Cleaver Mulundu Distinguished Invited Guests Ladies and Gentlemen  I wish to thank the President of the Chartered Institute of Management Accountants (CIMA) Zambia Chapter, Mr. Mulundu and his Executive for inviting me to present a paper to this distinguished gathering on the theme “Zambia’s Economic Outlook: What Have We Learnt in the Last 40 Years and Where Do We Go from Here.” The topic is timely, as it is very important to take stock of our past economic development efforts, including the mistakes and good policies of the past and assess the current economic conditions in order to put up a future strategy. In this respect, I will discuss what I consider to be the key lessons of macroeconomic management and present an outlook for the period ahead. In so doing, I will also highlight the challenges that lie ahead in our quest to develop our economy. Mr Chairman May I start by reviewing our economic performance during the last 40 years.
Other important events that affected Zambia’s economic development in her early stages of nationhood included: (i)  The pronouncement of the Unilateral Declaration of Independence (UDI) by the Ian Smith regime in the then Southern Rhodesia (now Zimbabwe). The declaration of UDI had both positive and negative impacts on the Zambian economy, although the negative effects outweighed the positive gains. The positive gains relate, mainly, to the relocation of industries from Southern Rhodesia (now Zimbabwe) to Zambia to avoid being affected by the sanctions imposed by the International Community, as a result of the declaration of UDI in 1965. This contributed to the growth of the Zambian manufacturing sector and the increase in employment levels. However, the declaration of UDI had serious adverse effects on the blossoming Zambian economy. As you may recall, at independence, the economies of Southern Rhodesia (now  BIS Review 5/2005  1  Zimbabwe) and our economy were intertwined. Southern Rhodesia was Zambia’s biggest trading partner as well as the main supply route to the sea. The severing of trading, commercial and transportation relations with Southern Rhodesia on account of UDI therefore, meant that Zambia had to invest heavily in her own transportation infrastructure, which finally led to the construction of the TAZAMA oil pipeline, Indeni refinery, TAZARA, the Great North Road (which used to be known as the Hell Run), etc., in order to transport her essential imports and exports. These were huge projects whose construction required enormous borrowing from countries like China, Italy, France, etc.