VISITORS to Zambia who are pushing 40 face a sobering fact. Were they locals, statistically, they would be dead. The average life expectancy in Zambia is 38. This is at the lower end of the spectrum in Africa but not rock bottom. What makes it unusual is that Zambia in many ways feels like the sort of place where people live long, decent lives. Perhaps not in the bush, where women must cook over open fires and men are mostly unemployed. But in Lusaka, the capital, an older Zambia survives.
Some 40 years ago, the former Northern Rhodesia was a middle-income country. Average Zambians were wealthy by African standards. They had salaried jobs that paid well and gave them enough time off to enjoy their relative wealth. A bout of nationalisation, later reversed, destroyed the economy and with it the chance for many to grow old thanks to decent health care. HIV also played its part.
Today urban professionals are still well paid but the gap between the employed and the unemployed, who make up more than half the population, grows ever wider. A junior economist fresh out of university can command a monthly salary of $3,000 to $4,000 in Lusaka. Miners too do comparatively well, up to $1,000 (though some are poorly paid). The high wages no longer seem so outlandish when one takes into account what stuff costs in Zambia. A bottle of wine from neighbouring South Africa is sold for twice as much as in overpriced and far away London. The World Bank estimates that the cost of living in Lusaka is 30-40% higher than in Washington, DC. The Zambian economy may be growing at a respectable rate of 6% but that is mostly because Zambia opened the world’s biggest copper mine just as world copper prices were going through the roof. Foreign resource extractors are queuing up. But high wage costs have scared away other investors.
Why is Zambia so expensive? Observers have offered a number of explanations. The labour market is rigid—a 15% annual increase in wages is customary. Transport costs bump up the price of everything else—Zambia is a landlocked country with little domestic manufacturing. The cost of finance is high—banks charge up to 35% in interest (one study even reports loans with 100% interest rates).
Baobab isn’t quite satisfied with any of these explanations. They surely contribute to the high costs. But there must be more to it. Could one of the highly paid Lusakan economists offer an answer, please?