Advertisement

Delivering Community Power CUPW 2022-2023

Canada voices approval of IMF austerity program in Zambia

Ottawa has played a notable role in the push for the privatization of Zambian resources

Canadian PoliticsEconomic CrisisAfricaCanadian Business

Photo by Cliff Owen/IMF/Flickr

On June 26, 2022, Prime Minister Justin Trudeau met with Zambian President Hakainde Hichilema. According to the prime minister’s office, the two leaders discussed the “close bilateral partnership between Canada and Zambia” and “agreed to deepen economic cooperation.” Of course, the mining sector merited special mention: “[The leaders] welcomed the recent agreement with First Quantum Minerals Ltd. as an example of the strong partnership between both countries in the mining sector.”

Under its new agreement with the Zambian government, Canada’s First Quantum is putting US$1.25 billion toward expanding its Kansanshi copper mine. First Quantum, which mines around half the copper produced in Zambia, agreed to the expansion only after the Hichilema administration “committed to a more predictable investment climate.” One aspect of Zambia’s newly “predictable investment climate” is the slashing of copper mining royalties, which were already among the lowest in the world.

Canada has enormous economic interests in Zambia. Five percent of Canadian mining assets abroad are located there. The Canadian government values them at $9.4 billion, around half of Zambia’s total GDP. For its part, First Quantum’s total mining revenues from 2021 valued $9 billion.

Zambia has been embroiled in a debt restructuring crisis since it defaulted on its international debts—$17.3 billion in total—in 2020. In February 2021, the former government under Edgar Lungu requested to restructure Zambia’s debt, and on August 31 of this year, the International Monetary Fund (IMF) announced a bailout plan.

On September 6, the IMF released its conditions for the $1.3 billion loan program. They represent the newest stage in the privatization of Zambian resources and the external imposition of harsh austerity on the African country—not surprising, but remarkably callous given that 60 percent of Zambians live in poverty, 1.35 million Zambians are experiencing severe food insecurity, and food and fuel prices are increasingly unaffordable given the global economic crisis.

The IMF’s debt restructuring program demands the abolition of fuel subsidies and a rise in electricity tariffs that will mainly impact those living in poor rural areas. Additionally, the IMF is stripping down agricultural subsidies even further, despite the fact that these subsidies support hundreds of thousands of small-scale maize farmers in the countryside. Meanwhile, Zambia has cut its health and social protection programs by 20 percent over the past two years, and further cuts are on the books for 2022-2026. The IMF refers to these domestic spending programs as “excessive and poorly managed public investment” and “regressive and wasteful subsidies.”

In his meeting with Hichilema, Trudeau voiced his approval of the IMF austerity program. The news release about the meeting stated that he gave Canada’s “ongoing support for Zambia’s efforts to secure debt treatment, recognizing the importance of financing for development and recovery from the devastating economic impacts of the pandemic.”

Ottawa has played a notable role in the push for the privatization of Zambian resources. In the late 1980s, the Canadian government reduced its aid payments to Zambia in order to pressure the state to adopt neoliberal reforms written by the IMF and World Bank.

In the 1990s, the Bretton Woods institutions were preoccupied with the breakup and privatization of Zambia’s state mining company and conditioned debt relief on this neoliberal reformation. Zambia’s former Finance Minister Edith Nawakwi stated, “we were told by advisers, who included the International Monetary Fund and the World Bank that for the next 20 years, Zambian copper would not make a profit. [But, if we privatized] we would be able to access debt relief, and this was a huge carrot in front of us—like waving medicine in front of a dying woman. We had no option.”

As Yves Engler notes:

Ottawa played a part in the privatization push. Canada was part of the World Bank-led Consultative Group of donors that promoted the copper selloff… As part of a push for economic reform Ottawa secured an agreement that gave a former vice president of the Bank of Canada the role of governor of the Bank of Zambia, where he oversaw the country’s monetary policies and “responses to the ‘IMF.’


While claiming to support Zambia’s efforts to free itself of its debt burden, the Trudeau government has given its unconditional support to Canadian mining companies operating in Africa and has joined the long succession of Canadian prime ministers who support IMF reforms on the continent. The latest wave of neoliberal impositions will only serve to benefit foreign capital more while twisting the knife in the gut of the Zambian people.

Owen Schalk is a writer based in Winnipeg. He is primarily interested in applying theories of imperialism, neocolonialism, and underdevelopment to global capitalism and Canada’s role therein. Visit his website at www.owenschalk.com.

Advertisement

BTL 2023

Browse the Archive