Business Unity South Africa

1

• Business Unity South Africa
• The Impact of the Global Economic Crisis on
  Selected SADC Countries
• 09 December 2009

2
ZAMBIA COUNTRY REPORT

• The impact of the global economic crisis on
  Zambia
• Summary of key findings

3
Real GDP

• On average growth rate averaged 6 per annum
  since 2003
• Commodity dependent country
• Decline in growth due to
• Fall in copper price from US 8985 per metric in
  June 2008 to US 2811 per metric
• Reduction in demand for metals

4
Current Account Balance

• Main effect on the recession has been on the
  external account
• Major exports are mining related such as copper
• Value of exports has decreased by 26 in 2009
  due to declining demand for metals
• Value of imports has decreased by 19 in 2009
• Tourism sector is expected to decline by 15 in
  2009

2006 2007 2008
2009
5
Government Expenditure

• For past 5 years Zambian government has exercised
  prudent fiscal management
• In light of the recession, the following
  additional demands placed on the government
• Maintaining a growth trend of 6
• Investment in infrastructure
• Social spending
• Marginal increase in government expenditure
  expected
• 2008 Fiscal deficit was 2.1 of GDP
• 2009 Fiscal deficit was 2.3 of GDP
• 2010 Government expected to spend K16 717.8
  billion or 22.5 of GDP

6
Unemployment and Job Losses

• Unemployment rate for 2006 14

• In light of reduced earnings mining companies
  responded by
• Cutting back on project developments
• Placed under governments stewardship
• Temporary or permanent closure such as Luanshya
  Copper Mine and Mulai Nickel Mine
• Government estimated that 8000 jobs have been
  lost due to the recession
• In response government instituted tax and
  expenditure measures to safeguard mining
  operations
• Since then, Luanshya Copper Mine has reopened
  with Mulai Nickel Mine about to reopen
• Government estimated that 1500 jobs have been
  regained

7
Government Responses

• Active engagement with the mining industry
• Government instituted tax and expenditure
  measures to safeguard mining operations
• Intended to save jobs in mining as well as other
  sectors in the mining value chain
• Increasing government expenditure
• Approach of government is to focus on economic
  diversification and increasing competitiveness

8
Summary and Conclusions

• Impact felt within the mining sector -- minerals
  and copper etc.
• Zambias exports reduced as demand and prices
  declined
• In 2009 8500 jobs were lost and 1500 were
  regained
• Through tax and expenditure measures government
  actively intervened within the industry to
  protect jobs
• Public sector deficit expected to increase
  marginally