Zambia's Copperbelt Reels From Global Crisis

The Indian-owned Konkola Copper Mines in Zambia employs more than 12,000 people, but it plans to lay off nearly 1,100 to cut costs. The mining industry employs 10 percent of Zambia's workforce.
The Indian-owned Konkola Copper Mines in Zambia employs more than 12,000 people, but it plans to lay off nearly 1,100 to cut costs. The mining industry employs 10 percent of Zambia's workforce. (By Karin Brulliard -- The Washington Post)
Buy Photo
By Karin Brulliard
Washington Post Foreign Service
Wednesday, March 25, 2009

LUANSHYA, Zambia -- The global economic meltdown swept into this company town and took down the copper mine in January. It left in its wake a crisis measured in unsold tomatoes at the market, empty stomachs and desperate people lined up outside Chishimba Kambwili's pink house each morning.

"This town is fully dependent on the mine," Kambwili, the town's parliamentary representative, said before handing $9 of his own money to one visitor who said that laid-off miners no longer buy her sugary fritters, that the landlord was about to kick her out and that she had six mouths to feed. "The majority of people are now wallowing in abject poverty."

Mines here in Zambia's Copperbelt region drive this poor nation's economy, but a plunge in global trade has slashed demand for the copper used to construct electronics and houses in the United States and Asia. That is prompting mines here to slow and shut, limiting tens of thousands of Zambians' access to schooling, health care and regular meals.

Africa's resource-fueled economies have grown steadily in recent years, improving the lives of millions of people. Now, as prices drop for Botswana's diamonds, Chad's oil and Tanzania's cotton, a crisis that began in the rich world is threatening to drive millions more into poverty, according to the World Bank, and raising the specter of unrest.

For laid-off mine electrician Lucas Ngoma, feeding a family of eight has come to mean bartering a DVD player for a sack of dried fish.

"We used to eat three meals a day. Now we do one," said Ngoma, 45. "We will be rationing. One fish can be shared."

Of the 26 countries the International Monetary Fund has flagged as "highly vulnerable" to the shocks of the global crisis, half are in Africa. The fund has scaled back its 2009 growth forecast for the continent from 6.7 percent to 3.25 percent.

The problem is not just a collapse in commodities prices. Foreign investment is receding in countries such as South Africa and Kenya. Remittances are dropping in Liberia. Aid flows from economically stressed donor countries might retreat. Much will depend on how quickly advanced economies recover, according to experts and African leaders, who warn that a prolonged downturn could stir turmoil.

"We must ensure that Africa is not left out," Dominique Strauss-Kahn, the IMF's managing director, told African finance ministers at a conference this month. "This is not only about protecting economic growth and household incomes -- it is also about containing the risk of civil unrest, perhaps even of war. It is about people and their futures."

Among the hardest-hit African nations is copper-rich Zambia, which derives about two-thirds of its export earnings from the metal. The industry boomed as the price of copper soared to more than $8,000 a ton last summer, helping drive Zambia's 5.8 percent growth rate for 2008. By December, when the price had fallen more than 60 percent, the mines, which had spent billions in recent years on exploration and new technologies, began operating at losses. In recent days, the price has been about $3,900 per ton.

The nation's currency, the kwacha, has tumbled more than 70 percent against the dollar since last summer. Zambia's government predicts 5 percent growth this year, a rate economists say would be miraculous. Most forecast growth of 2.5 to 3.5 percent.

Scrambling to deal with the crunch, Zambia is seeking a $200 million emergency loan from the IMF. It has extended a carrot to mining houses by scrapping a major tax on their profits. To curb dependence on copper, the finance minister has proposed boosting funds for agriculture, tourism and infrastructure -- key, experts say, to developing industries in a landlocked nation with few paved roads and a dismal power system.

CONTINUED     1        >

© 2009 The Washington Post Company