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Gender and Liberalisation

Financial Market Liberalisation and the Marginalisation of Women: the Example of Zambia

Sara Hlupekile Longwe

1 December 2005

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Using the example of Zambia, this paper considers whether the liberalisation of financial markets leads to rural women's increased participation in economic development. This question is here seen as a key test for liberalisation theory. It is an examination of whether macro-economic enthusiasm has any basis in micro-economic realities.

In particular the paper focuses on the current process of privatising the parastatal commercial bank ZANACO. This privatisation is one of the IMF conditions that the Zambian government was required to meet before being given HIPC status, and therefore qualification for debt forgiveness. Increased liberalisation has been part of IMF conditionality for the past twenty-five years that Zambia has been heavily dependent on balance of payment support. As a consequence, financial markets in Zambia are now extremely liberalised, with easy entry into Zambia for foreign banks, a floating exchange rate, and no foreign exchange controls. The central bank now has a high degree of autonomy from government, and the base interest rate largely reflects the balance between capital supply and demand.

The underlying rationale for this liberalisation of financial markets is that a free market in money will make local and foreign capital more available and accessible. In Zambia, financial capital is the one factor of production which has always been in critically short supply. By comparison, there is a plentiful supply of various natural resources, including land, water and minerals. Unusually for many developing countries, there is a plentiful supply of educated and skilled human resources in many fields. There is also a large surplus of cheap labour.

As in most of Africa, it is women rather than men who are the food producers. It is estimated that in Zambia women are responsible for 80% of all agricultural production. Women are also particularly active as traders and marketeers, especially in the food market. But, for reasons discussed in this paper, women have always been particularly cut off from access to financial markets, both in access to short-term credit and in access to capital investment.

This paper argues that the general liberalisation of financial markets has enabled and prompted banks to adopt policies of profit maximisation which are detrimental to national economic development. In particular, liberalisation has had the effect of making banking services and credit facilities less available to women, and to small-scale rural producers, who are the key to increasing food production in Zambia.

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