Consumption Behaviour in Zambia: The Link to Poverty Alleviation?

K. Ludi: consumption behaviour in Zambia

Figure 3 shows the trends in real PCE per capita in US Dollars. The aforementioned has
declined at a steady rate, with the only periods of slight augmentation being the early-
1970s, the early- and mid-1980s, and the early-1990s. The level of real PCE per capita
has remained constant at approximately US$270 since 1995.

Figure 3: Real Zambian PCE per capita in constant 1995 US Dollars (1970 - 2001)

The relative high values of real PCE in Zambia in the early-1970s can be ascribed to the
‘post-independence boom’. The prosperity of the Zambian economy was largely
attributable to increased earnings from mineral exploitation as copper prices climbed. An
average increase in real GDP of 2.3 per cent between 1964 and 1974 translated into
increased individual incomes and thus increased PCE. However, those very copper
prices, along with other external factors, caused an economic decline in Zambia from
1975 to 1990. World copper prices collapsed, and a decline in the quality of the copper
ore in Zambia exposed the country’s over-dependence on the mineral’s extraction. The
oil price shocks of the 1970s and the resultant global inflation hit Zambia’s consumers
hard, and thus diminished real PCE. A worsening balance of payments position was
addressed by increased borrowing. Zambia’s involvement with various political freedom
fighting movements resulted in trade barriers, which further deteriorated the economic
situation (Biz/ed 2005).

The sharp decline in real PCE (in levels and per capita) in the latter half of the 1980s was
the direct result of the Zambian government’s attempt to implement a structural

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