The signing of a memorandum of understanding with Anglo American Corporation for the privatization of Zambia's two main copper mines, Nchanga and Nkana, has provided a significant boost to the country's economic prospects. Not least because it opened the way to the approval of an IMF enhanced structural adjustment facility (Esaf) and a subsequent debt-rescheduling agreement by the Paris Club.
However, 1999 is still set to be a difficult year as the agricultural sector struggles to offset the impact of a continuing fall in copper output and knock-on effects on the manufacturing and service sectors. Concluding the privatization deal and maintaining donor support are vital to Zambia's prospects.
The target date of March 31 for a handover of the Nchanga and Nkana copper mines to the new owners has passed without agreement, as Anglo has had difficulty finding a partner. In April, Codelco, the world's largest copper producer, controlled by the government of Chile, announced that it was considering a joint venture with Anglo American, though a final decision may not be made until mid-year.
Delays are costly, with arrears from Zambia Consolidated Copper Mines (ZCCM) to its suppliers reportedly building at a rate of $20 million a month, and having a serious impact on the manufacturing and service industries in the copper belt.