Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
Social security systems in Zambia 
LAWRENCE MUKUKA1, WEBBY KALIKITI2 AND DANN K. 
MUSENGE3 
ABSTRACT 
This survey of social secruity provision in Zambia starts with a 
sketch of the historical and economic background since the late 
nineteenth century to the present, showing how traditional social 
security arrangements were destroyed and the people mpoverished 
by a series of governments, starting with the colonial State and 
continuing through to the late 1990s. It describes current and 
recent arrangements under the following headings: both Stateprovided 
and private formal social security and non-formal social 
security schemes. Under the latter heading are considered the 
traditional security provided by the extended family and semiformal 
schemes such as reciprocal urban networks, the church, 
chilimba and market associations. The latter two are singled out for 
detailed study and assessment in terms of their viability and potential 
for strengthening, in Phase II. 
Phase I: Overview 
ZAMBIA BECAME INDEPENDENT in 1964. The country is landlocked, occupying 
an area of 752,614 km2 with a population density of 10.6 persons 
per square kilometre in 1993. The country's estimated population in 
1998 was 10 million, with about a 2.7% annual growth rate and with 47% 
of the population below the age of 15 years. Dependency ratios and the 
' University of Zambia 
2 University of Zambia 
3 Policy Advisor, National Pension Scheme Authority 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA
potential for future population growth are, therefore, very high. Zambia 
is also one of the most urbanized countries in Africa. In 1963, roughly 
20% of Zambia's population lived in urban areas. In 1998, the proportion 
of urbanization had dropped to 3 8% from 47% of 1991, mainly 
because of the economic restructuring which brought about business 
closures and job losses (GRZ/UNDP 
1997:20). 
This accelerated urbanization resulted from the country's copperbased 
economy that started in the mid 1920s, together with the 
government's plan, from 1964 to 1985, to develop a modern industrial 
economy at the expense of agriculture and rural development. This led 
to the concentration of people along the line of rail and especially on 
the Copperbelt. Many able-bodied young men and women have migrated 
to urban areas in search of a better standard of living, even 
though industrial development has been insignificant, a situation that 
has also negatively affected agriculture. 
At Independence Zambia was one of the richest countries in the region. 
This promise was, however, shattered in the 1970s by the collapse 
of copper prices (copper having been for a long time the mainstay of 
the economy and the main foreign exchange earner) and inappropriate 
ideological and macro-economic policies. 
In 1972 Zambia entered two decades of one-party state rule. This 
meant the suppression of political opposition, the erosion of the distinction 
between the ruling party and the apparatus of the State and a 
swelling party bureaucracy, which served only to duplicate and further 
confuse the work of the civil service. This all led to stagnation for 
many years. The people's living conditions declined and popular discontent 
increased, resulting in the 1991 elections with a resounding 
vote for a new government. 
The two decades of decline have caused tremendous poverty and 
hardship. This poverty includes a low life expectancy, low educational 
opportunities, inadequate access to resources for a decent standard of 
living (such as income and consumption, housing, health, clean water 
and sanitation and productive potential) and the lack of freedom to 
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Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
exercise choice and participate in the society. About six million people 
(or two-thirds of the population) live below the poverty line. 
The more remote an place from urban areas, the poorer it is. Thus the 
urban provinces of Lusaka, the Copperbelt and Central Province, 
located along the main line of rail, have lower levels of poverty than 
others. These urban provinces have been the beneficiaries of the policy 
and practice of industrialization and of government subsidies from 1964 
to 1991. They also have better social amenities and support better 
lifestyles than those in rural areas as most schools, piped water 
facilities, employment and health facilities have been concentrated here. 
Poverty in urban areas, however, has been increasing at a faster rate 
than in the rural areas because of high unemployment, mass lay-offs of 
workers (as part of the structural adjustment programme), low salaries 
and the inadequate coverage and benefits of existing formal social 
security schemes. At the time of the study, more than three-quarters of 
the population were suffering from social insecurity because the social 
security schemes instituted from 1964 to 1991 were limited in scope, 
cover, adequacy and benefits." 
By 1991 Zambia was among the world's poorest countries. The total 
external debt in December 1992 stood at US$7.04 billion (386% of GNP) 
and the average economic growth rate between 1980 and 1992 was 
0.8%. The total fertility rate was 6.5% and the maternal mortality rate 
was 600 for every 100,000 live births. The total expenditure on health as 
a percentage of GNP was 3.2% in 1990 and only 48% had access to 
safe water supplies. 
Pre-Independence to 1964 
Looking further back we can see that colonial policies and the advent 
of capitalism laid the foundation for this poverty. Before 1890 Zambia 
consisted of independent ethnic subgroups that were mainly agricultural 
(Daniel 1979). In 1890 colonialism reached Zambia. The British 
South Africa Company signed a treaty with a Zambian chief which purported 
to give it mining rights and control of mining development in the 
whole of Zambia. For 34 years Zambia remained under indirect rule un- 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 67
til the Colonial Office instituted direct rule, which remained in place for 
the next 40 years. 
By 1926 the first copper mine had started production, marking the 
beginning of urbanization and industrialization in Zambia. At this time 
the population density on the Copperbelt was 2.2 persons per square 
mile (Daniel 1979). As this was clearly insufficient to provide enough 
labour locally, labour began to be recruited from other areas. An 
industrial colour bar and State-entrenched, institutionalized racism 
ensured that black miners could not benefit from their labour. They had 
no right to negotiate their wages, working conditions or welfare. They 
were paid lower wages than white miners and, though not formally 
barred from education (Berger 1974:46), it was only in 1930 that the first 
government school for Africans was started. There was no policy to 
train Africans to perform skilled labour and African apprenticeship was 
illegal until the 1960s. 
By 1965 there were still only 158 African apprentices in training, 
compared with 488 non-Africans; of the African apprentices, 114 were 
apprenticed in metal mining industries (Daniel 1979:129). At Independence 
Zambia was one of the least educated countries in Africa. Skilled 
and educated manpower were among Zambia's scarcest resources. 
Taxation contributed to both rural and urban poverty. It forced 
mostly young, able-bodied men to leave their homes and families in 
rural areas to take up waged employment in the Copperbelt. Subsequently 
they were obliged by the colonial government's return 
migration policy to return to their rural homes while others replaced 
them in the towns. Among the arguments for this policy was that, if 
African workers lost their rural ties, a slump in copper production and 
export would cause serious unemployment. More importantly for this 
paper, by constantly changing the labour force, companies reduced the 
costs of labour in the areas of housing, health, school and social 
security. They thus made sure they would not have to award the salary 
increases that are due to experienced and long-serving labour. The cost 
of housing and feeding wives and children was also avoided and 
mineworkers received bachelor's rations. The companies took no 
responsibility for workers' compensation, especially during the Second 
68 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
World War. Integral to these racially-motivated policies was the belief 
that the African mineworkers should look to the village for support and 
social security in sickness and old age. 
The development of rural poverty and urbanization 
Before colonialism the absence of money or cash as a medium of 
exchange in rural Zambia did not entail poverty, as cash was not 
necessary for survival. The traditional economy was sufficiently open 
and self-contained to support the rural population. But the combination 
of the emerging cash economy, labour migration and State taxation 
policies disrupted the entire social structure, depriving subsistence 
rural economies of their most valuable asset, strong young men. There 
was a correlation between coercion and rural impoverishment and 
between rural-urban migration and the impoverishment of rural Zambia. 
In the northern region of Zambia, for instance, which was used as a 
labour pool for the mines, the impoverishment of the Bemba people was 
due to the absence of some 50% of able-bodied men (Richards 1932). 
Production fell in areas where the labour of men could not be easily 
substituted by that of women. 
Stitchter (1985) shows that structural underdevelopment of the 
peasantry was the consequence of labour migration. The government 
lacked an African agricultural policy: in 1962, "there were only 350 
tractors in use on African farms" (Daniel, 1979:14). In areas and times 
when migration was coupled with the outbreak of locusts, famine 
prevailed, forcing more to migrate. As a result of all this production 
declined substantially. 
Migration contributed to the independence of young men in relation 
to their elders as traditional social controls were loosened and tribal 
sanctions ceased to be fully effective. Divorce, which earlier had been 
rare, increased and villages started splitting up into small family 
groups. The ethnically heterogeneous town became the focus of political 
life and innovation. New urban institutions, particularly the Western 
church, replaced traditional social control mechanisms in setting urban 
moral values and norms to regulate social behaviour. Urbanization in 
the Copperbelt accelerated in spite of tough pass laws, enforced iden- 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 69
tification certificates, tax receipts, visitor's permits, night passes, police 
raids, the repatriation of women and children living in towns without a 
male guardian and, of course, denial to Africans of permanent citizenship 
in the urban areas. 
Permanent settlement ("stabilization") 
During the Second World War the demand for copper increased substantially, 
but this did not benefit the African mineworker whose wages 
had been cut during the Depression. By 1940 the ratio of European to 
African earnings was 34:1 compared with 28:1 in 1937 (Daniel 1979). 
When white mineworkers left to serve in the war, however, a temporary 
labour shortage was created and the mining companies were obliged to 
start accepting Africans in some skilled jobs which earlier had been 
exclusively reserved for white workers. Africans exploited this situation 
to their advantage by demanding wage increases, unionization and a 
general improvement in their working and living conditions. The efficiency 
of African labour increased as a result. The growing demand for 
copper also encouraged the companies to expand and implement 
technological advances. As mechanization in the industry increased it 
was realized that training Africans on how to use the machines and 
allowing them to stay longer, so that training was not wasted, might 
actually be cheaper than not doing so. This was a turning point in the 
African labour situation in the Copperbelt (Berger 1974). 
Finally, however, when the stabilization policy for the African 
migrant workers in the Copperbelt was established it brought its own 
problems of unemployment, urbanization and political agitation.' Despite 
the prosperity of the copper mining industry at this time, it was 
impossible for the mining companies to absorb all of those who migrated 
to the towns in search of work and unemployment resulted. 
Although this trend continued up to the Independence, its effects were 
mitigated by the small population of the country and that of the Copperbelt 
itself, and by the high demand for copper which brought 
revenue. The copper-driven economic boom continued until the early 
.1970s. 
70 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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Post-Independence 
Four years after Independence the Mulungushi Declaration signalled 
the beginning of direct intervention by the United National Independence 
Party in the economy. When this was fully implemented, between 
1972 to 1989, it established restrictive policies, limiting the degree of 
competition to which the domestic economy was exposed; suppressing 
the role of market mechanisms in guiding the allocation of resources 
and over-extending the role of the public sector (World Bank 1994:11). 
The government took these steps because the national economy was 
dominated by non-Zambians and profits were being sent outside the 
country. 
As a result the public sector expanded through the creation of 
parastatal organizations such as the Industrial Development Corporation 
(INDECO), the Financial Development Corporation (FINDECO) and 
the Mining Development Corporation (MINDECO), to run these specialized 
areas, together with the mother holding company, Zambia 
Industrial and Mining Corporation (ZIMCO). A protectionist trade regime 
was imposed and government gradually showed its inability to 
adapt to a changing environment. 
While this move appealed politically to the electorate and was consistent 
with the new self-determination that came with Independence, 
the inefficiencies of State-run commercial enterprises created serious 
social problems. The economy was mismanaged; health, education, 
nutrition, infant mortality and life expectancy deteriorated and access to 
safe drinking water and sanitation declined, high unemployment and 
underemployment grew, together with inflation, the public debt, poverty 
and inequality in the distribution of income and wealth. A considerable 
part of the social service infrastructure fell into disrepair. At the same 
time copper started experiencing falling prices at the world market. 
Since expanding the agricultural sector and rural development had 
received mere lip-service by government, the downturn of the economy 
was complete. If the colonial government had not neglected agriculture 
and rural development in its reign of 27 years, this downturn would not 
probably have been so devastating. But: 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 71
Despite the availability of land and the end of colonial policies 
restricting smallholder cash-crop agriculture, there was no 
transformation after Independence, as that experienced in postindependence 
Kenya. The competition with the urban labour 
market, which drained many of the most energetic members of the 
rural labour force to the towns was one factor holding back 
agriculture. A trading system that de-emphasized the development 
of competitive marketing channels and instituted pricing policies 
that discouraged the development of an efficient pattern of crop 
specialization was another. (World Bank 1994:13). 
By the mid 1970s government had started to address the country's 
own structural problems but these attempts were neither comprehensive 
nor sustainable. The three attempts to stabilize its economy in 
the IMF/World Bank-supported stabilization packages of 1973/74, 
1976/77 and 1978/80 failed. Government was faced with serious political 
discontent which resulted in the food riots on the Copperbelt and a loss 
of life in 1986, all of which paved the way for the discourse on multiparty 
democracy and market reforms and led to a new government by 
the Movement for Multiparty Democracy (MMD). Since 1991 the 
MMD government has undertaken bold steps with a vigorous structural 
adjustment stabilization package. 
The typical structural adjustment programmes Zambia were, in 
theory: 
based on an economic model of private ownership, competitive 
markets and outward development strategy. Developing free and 
competitive markets and liberalizing the price systems are necessary 
for allocational and operational efficiencies. A stable 
macroeconomic environment is also essential to allow markets to 
operate efficiently and investors to make correct decisions based 
on market signals (World Bank 1996:7). 
The new government aimed at attaining macro-economic stability and 
redirecting public expenditure to the social sector in order to alleviate 
the short-term negative effects of its structural adjustment programme 
72 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Mukuka, Kalikiti and Mussnge /ZAMBIA REPORT 
on the poor and vulnerable groups of society, especially women and 
children. These processes and activities, however, initially brought 
about unprecedentedly high levels of job losses from business closures, 
unemployment and social insecurity and poverty. 
As the new macro-economic situation has not yet been able to 
reverse the downturn of the economy, poverty and social insecurity 
levels have been on the increase both in all areas. While many of the 
activities implemented under economic structural adjustment were 
desirable and sound they seriously lack the complementary role of a 
productive agricultural sector to provide food, employment and income, 
raw material for industry and investment capital for other economic 
sectors as well as foreign exchange. Overall, the result of this transition 
from a command economy to a liberalized economy has been increased 
levels of poverty and social insecurity among the majority. 
The study 
Problem statement 
It had been widely recognized that the formal social security system in 
Zambia is inadequate in terms of its capacity and coverage and that 
the majority of people rely on non-formal social security systems and 
schemes. However, there are still gaps in available knowledge, especially 
about non-formal social security systems and schemes because 
no previous comprehensive study on social security has analysed and 
documented them. These gaps include an understanding of their 
structures, capacity, functions, contingencies covered, viability and 
conceptualization of social security itself. This study, therefore, seeks 
to analyze both the formal and non-formal social security systems. 
Research design and methodology 
The study was conducted in Lusaka, the Copperbelt, Eastern and 
Luapula provinces. The first two urban provinces were selected for the 
study because they had an adequate mix ofboth formal and non-formal 
(particularly semi-formal) social security schemes while the rural 
Eastern and Luapula provinces were selected to find out what nonformal 
social security schemes exist there and how well they are 
functioning. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 73
Formal and informal social security systems 
There are two systems of social security: formal social security for 
workers employed in the formal sector of the economy and the nonformal 
social security system for the majority who do not participate in 
Year 
Public schemes 
1966-200C) Zambia National 
2000 National Pension Scheme 290,000 
1968 
1954 
1964 
1952 
Private Schemes 
1982 
Other private 
SOURCE: NATIONAL PENSION SCHEME AUTHORITY, RESEARCH AND DEVELOPMENT SECTION AND 
CENTRAL STATISTICAL OFFICE, QUARTERLY EMPLOYMENT AND EARNINGS ENQUIRY, 2000. 
74 
Scheme Number Protection 
covered against 
341,000 
Provident Fund (up to Jan 
2000) 
101,000 
14,000 
Authority (beginning Feb 
2000) 
Public Service Pension 
Fund 
Local Authority 
Superannuation Fund 
Workers Compensation 385,000 
18,000 
Fund 
Pneumoconiosis 
Compensation Board 
18,000 Mukuka Pension Fund 
20,000 
survivors 
JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002 
Old age, retirement, 
invalidity.survivors, 
emigration supplement 
saving, homeownership, 
maternity and funerals 
Retirement, invalidity, 
survivors and funerals 
Retirement, invalidity, 
survivors and funerals 
Retirement, invalidity 
and survivors 
Employment injury 
Invalidity arising from 
hazardous working 
conditions for miners 
Retirement, invalidity, 
survivors 
Retirement, invalidity,
Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
the formal sector employment. Each of these two systems has its own 
schemes. 
Formal social security since 1964 
Soon after Independence in 1964 the new government realized the need 
to institute social security schemes, particularly for its rapidly growing 
formal employment sector, especially during the economic boom years 
(1964-1974). The assumption was that, with the advent of a money 
economy and the accelerated migration of people from rural to urban 
areas in search of work, the extended family system, kinship and group 
help, which had hitherto provided their social security, would significantly 
weaken. A new social security system was needed to protect 
formal sector employees and their dependents against the loss of 
income through retirement, disability, maternity and sickness. Subsequently, 
a two-tier system of social security was developed, 
mandatory and statutory public social security schemes and private 
and voluntary occupational pension schemes. 
The five mandatory and statutory social security schemes are indicated 
in Table I. These statutory social security schemes, together with 
private social security schemes, cover about 450,000 employees, corresponding 
to more than 90% of the formal sector labour force but to 
only 13% of the total labour force and 5% of the total population. The 
remaining 95% rely on non-formal social security arrangements. The 
total assets of all statutory funds correspond to about 1.6% of GDP, 
down from well over 10% in the 1980s. 
Mandatory and statutory public social security schemes 
Zambia National Provident Fund (up to January, 2000) 
The Zambia National Provident Fund, which was administered by the 
Ministry of Labour and Social Security, was established in 1966 as a 
compulsory savings scheme. It was the largest public social security 
scheme and membership was compulsory for all formal sector employees 
except civil servants, members of the defence forces, teachers, 
employees of local authorities, the National Housing Authority and the 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 75
Zambia Electricity Supply Corporation. Zambia National Provident 
Fund paid lump sum payments to its members against the contingencies 
of old age, retirement, survivors, invalidity, emigration, 
disability, maternity and funeral expenses. The contribution rate payable 
to the fund was 7%, consisting of 3.5% for employees and 3.5% for 
employers. 
Statutory provident fund provision was not tried in Zambia alone, 
but was started by many African countries as a means of compulsory 
saving. Employees and their employers would pay into a central fund 
regular contributions which would be credited to a separate account to 
which interest was periodically added. In times of old age, invalidity, 
sickness or death, the total credit accumulated would be paid to 
workers or their heirs. In some funds, earlier partial withdrawal was permitted 
in the event of sickness, unemployment or for other stipulated 
reasons. 
The Zambia National Provident Fund operated a defined contributions 
scheme, which meant that the fund had no predefined obligations 
with respect to the level of benefits. It provided flat rate funeral and 
maternity grants to members who had contributed for at least two 
years. It also offered a home ownership withdrawal scheme which 
allowed members to withdraw on one occasion, up to 60 contributions. 
Membership of the fund grew steadily from 5440 in 1966-1967 to 
about 570,000 in 1992-1993. This figure, however, included members' 
accounts which had been inactive over an extended period of time 
without further contributions or benefits claims. The total number of 
active contributors was estimated to be around 350,000, corresponding 
to about 70% of formal sector employees. About 14,500 private sector 
and parastatals employees were registered with the fund. Evasion and 
non-compliance by employers, often with the collusion of employees, 
was a serious problem. Although there were no accurate records to 
identify compliance levels, enquiries suggest that only about 60% of 
employers were up to date with their payments and at least 30% were 
more than 7 months in arrears. Although prosecutions were conducted, 
fines were low and thus did not deter would-be evaders. 
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The Zambia National Provident Fund was unable to provide adequate 
retirement benefits to its members. In part, this was due to weaknesses 
in the provident fund system itself which had no insurance element to 
protect members. For most people, a lump sum benefit represented an 
unsound basis for long-term income security. But these inherent weaknesses 
had been compounded by problems in the management of 
Zambia National Provident Fund. Firstly, the contribution ceiling was 
not regularly adjusted to take into account of inflation. Until 1995 
employers and employees were each required to contribute 5% of their 
gross monthly earnings up to a ceiling of about US$15.00, resulting in a 
maximum monthly contribution of about US$0.75. The level of average 
earnings, however, increased by 700% between 1992 and 1994 alone. 
Due to the failure to revise the ceiling regularly, the Zambia National 
Provident Fund had been operating on a flat rate basis with very low 
real contribution receipts and consequently low members' balances. 
The volume of contribution fell by about 90% in real terms between 
1981 and 1995. 
From the introduction of Zambia National Provident Fund in 1966 
until 1992-1993, a nominal interest rate of only 4.5 to 5.5% was credited 
to the statutory contributions in members' accounts. But over the same 
period, annual inflation increased from 33% to 200% and commercial 
deposit interest rates rose from 15% to 84%. In 1993-1994, the 5000 
Zambia National Provident Fund retirees received on average a lump 
sum of about US$10.00. The credibility of the scheme has suffered 
considerably from such low levels of benefit. 
Concerns about the low balances in members' accounts led to a 
decision to revalue the real estate owned by the Zambia National 
Provident Fund and the yields obtained from investment on Treasury 
Bills, but investment income was still insufficient to meet current 
administrative and benefit expenditure. The administrative expenses of 
the Zambia National Provident Fund had increased substantially. The 
administrative and management expenses of the fund were supported 
out of investment income. Measured as a share of investment income, 
they reached a peak of 254% in 1992. As a share of total revenue from 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 77
contributions, administrative expenditure peaked in 1995 at 102%. In 
spite of personnel reductions later, the Zambia National Provident 
Fund was still considerably overstaffed, with more than 1300 employees 
at one point. Steps to speed up the process of reducing expenses 
through a retrenchment programme imposed a severe financial burden 
on the fund, particularly since its staff pension fund was also believed 
to be considerably under-funded. 
National Pension Scheme Authority 
The government realized the inadequacy of the country's formal social 
security schemes as early as the 1980s and decided to reform them in 
order to meet the needs of the people. However, because of the deteriorating 
economic situation at that time, the implementation of the social 
security reforms was postponed. 
In 1992 the new government established a Department of Social 
Security in the Ministry of Labour and Social Security. Two years later, 
in 1994, the National Social Security Reform Implementation Committee 
to oversee the reforms was created. In November 1996 a new Act (the 
National Pension Scheme Act) was passed to repeal the Act of 1966. 
This Act sought to make the scheme autonomous from government, to 
make membership compulsory for all formal sector workers, to operate 
within the principles of prudential management and to adjust benefits to 
inflationary fluctuations as well as to ensure that political interference, 
low benefits and the other problems which weakened the Zambia National 
Provident Fund were minimized or removed. 
The reforms aimed to: 
• Dissolve the Zambia National Provident Fund (completed in 2000); 
• Merge the Workers Compensation Fund Control Board and the 
Pneumoconiosis Compensation Board (not yet accomplished at the 
time of the study); 
• Set contribution levels; 
• Put in place a regulatory system for private occupational pension 
schemes through the Pension Schemes Regulation Act of 1996, to be 
administered by the Ministry of Finance and Economic Development; 
78 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Mukuka, Kallkiti and Musenge /ZAMBIA REPORT 
• Promote public awareness of the new National Pension Scheme; 
• Train staff in actuarial sciences, social security, administration, 
computerization and other relevant areas and 
• Plan and organize the National Pension Scheme and put in place a 
technical and procedural administrative structure. 
Membership of the National Pension Scheme Authority is compulsory 
for all regularly-employed persons, including all new entrants to the 
civil service and local authorities. Contributions to the scheme are paid 
at the rate of 10% of pensionable earnings, divided equally between the 
employer and employees. The pensionable age is 55 for both men and 
women employees. The contingencies protected against by the National 
Pension Scheme Authority are listed below. 
Retirement benefit 
The retirement pension is payable to a member who has: attained the 
minimum age of 55 years or has contributed for a minimum of 180 
months (15 years) and has qualified under the reduced criteria for those 
between the ages of 39 and 48 years at inception. Members who do not 
meet the minimum eligibility criteria to receive the pension are entitled to 
a lump sum payment made up to the number of contributions made by 
themselves and their employers, plus interest calculated on their indexed 
contributions. 
Invalidity pension 
The invalidity pension is intended to cushion members against the loss 
of capacity to engage in substantial gainful employment. As invalidity 
can occur at any point in one's working life the minimum criteria to be 
eligible for this benefit are therefore lower than for retirement benefit. A 
member can qualify for invalidity pension if insured as described above. 
However, there is a further condition: members claiming this benefit 
should be certified disabled by a medical board appointed under the 
Act. The invalidity pension is payable to members who fulfil the following 
obligations: they have been certified as to incapacity; they have 
reached the pensionable age and they have paid at least 60 months' 
contributions. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 79
Survivors 'pension 
The survivors' pension is aimed primarily at protecting spouses and 
children of deceased members in the event of their death. The National 
Pension Scheme Authority will pay a survivor's pension only to surviving 
spouses and children, regardless of whether the marriage took 
place under statute or customary law. Surviving spouses are eligible for 
a pension until death or until they remarry, if they are caring for one or 
more children of the deceased member. If the surviving spouse is less 
than 45 years old and does not have children of the deceased to care 
for, he or she will receive a pension for only two years. 
In order for surviving children to be eligible for a pension, they have 
to be under the age of 18 years, or 25 years if they are in full-time 
education. The Act also provides for unborn children and those who 
are disabled by the age of 18 at the time of death of the member. Since a 
survivor pension is based on the work record of the deceased member, 
the member must have qualified for a retirement or invalidity pension 
for the survivor to be eligible. The National Pension Scheme Authority 
divides the available pension among the survivors according to a 
formula, without regard to whether any of the resultant shares fall 
below the minimum pension or not. 
Funeral grant 
The funeral grant is an ex gratia payment to survivors of the deceased 
member to enable them to undertake a dignified burial. The amount of 
the funeral grant has been set at 10 times the minimum pension in the 
year of the member's death. If a member dies without leaving a spouse, 
parent or sibling, the National Pension Scheme Authority will pay the 
funeral grant to whoever is liable to pay the funeral expenses. In order 
to qualify for a funeral grant the member should have either been 
receiving a retirement pension or invalidity pension or, in the case of a 
member who is still in employment, should have made at least 12 
months contribution in the previous 36 months of his employment. 
Although the government's intention was to produce the new social 
security scheme that gave Zambians a better system of social protection 
than before, the new scheme faces a number of challenges and 
constraints. The poor performance of the economy and the lack of 
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Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
financial resources militate against the effective functioning of a 
comprehensive social security system. The National Pension Scheme 
Authority needs to use its investments from contributions, not relying 
solely on the contributions of employees and their employers. This is 
because contributions are generally low, as the earnings of the average 
worker are low. It is, therefore, a serious challenge to have an effective 
national social security scheme with an insufficient number of wage 
earners who received very low incomes. 
One major weakness of the new scheme, which had been inherited 
from the Zambia National Provident Fund, is limited coverage. The 
coverage of the National Pension Scheme Authority is also limited to 
formal wage earners, whose numbers have significantly decreased. The 
new scheme has also shown that Zambia must provide some other form 
of social protection to the majority who are outside the formal wageearning 
sector. 
Public Service Pension Fund 
The Public Service Pension Fund, administered by the Cabinet, was 
established in 1968 to provide retirement pensions to permanentlyemployed 
civil servants. It also administers pension funds for teachers 
and members of the defence forces. The contribution rate payable to 
the fund is 14.5%; half from the civil servants and half from their employer, 
the government. At the time of the study the Public Service 
Pension Fund had about 101,000 members. Since 1993 the operations 
and finances of the Public Service Pension Fund have been separated 
from Government. A new Secretary was appointed and a new Board 
established under the chairmanship of the Permanent Secretary of the 
Cabinet Office. The administrative expenses of the fund were not met 
by the Public Service Pension Fund itself but by government. Since no 
updated audit had been conducted at the time of the study, accurate 
information on administrative expenditure was not available. 
The total assets of the Public Service Pension Fund were approximately 
0.4% of GDP in 1994. The principal legislation covers a range of 
situations relating to the termination of service which entitle members 
to benefit from their payments. The original intention was that the 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 81
Public Service Pension Fund would only be directly responsible for 
financing pensions for retirement at 55 years, subject to 10 years of 
pensionable employment; early retirement on grounds of ill health and 
dependent survivors, including death benefits. But there was also a 
provision for early retirement of an officer on abolition of a post in the 
interest of the economy, efficiency or the public interest. 
Local Authorities Superannuation Fund 
The Local Authorities Superannuation Fund, administered by the 
Ministry of Local Government and Housing, was established in 1954 
exclusively for expatriate workers to provide for old age, retirement and 
disability. In 1963 the membership was extended to all employees of 
local authorities between ages of 18 and 50. After Independence it was 
further extended to cover the employees of the National Housing 
Authority and the Zambia Electricity Supply Corporation. Initially, the 
contribution rate was 14% of pensionable salary, equally divided 
between the employer and the workers. It was subsequently increased 
to a total of 33% in 1989 with employees paying 10% and employers 
contributing 23%. At the time of the study the Local Authorities Superannuation 
Fund had approximately 14,000 contributing members. The 
fund is administered under a general manager appointed by a board. 
Administrative expenditure was 12.4% of contributions received in 
1992; this figure, however, did not necessarily indicate a high level of 
administrative inefficiency, since revenue from contributions had 
declined due to non-compliance. 
The fund has operated predominantly as a defined benefit scheme 
which provides old age retirement, invalidity and survivors pensions 
and funeral grants. The retirement age is 55 years and local authorities 
may retire employees aged 50 with a minimum of 10 years of service. 
In 1991 the Government made retirement mandatory for employees of 
local authorities who had completed 22 years of service. The Local 
Authorities Superannuation Fund suffered from three problems; noncompliance, 
low investment income and increasing expenditure and the 
82 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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scheme was experiencing difficulties in collecting contributions. In 1994 
local authorities were making contribution payments of only 29%. The 
high evasion can also be interpreted as a reaction to the dramatic 
decline of benefit levels through inflation, the lack of the scheme's 
credibility and the high degree of political interference in the management 
of the scheme. 
Although the fund has theoretically operated as a funded pension 
scheme, the income from the investment has been very low due to the 
erosion of reserves through inflation and the prescribed investment in 
non-performing assets. The obligation to retire after 22 years of service 
led to a significant increase in pension expenditure. This provision 
alone generated liabilities of about US$4.8 billion between 1992 and 
1994 but only about US$823,000 million was provided by government. 
Over 100 claims were outstanding, with the majority of benefit payment 
being delayed by more than a year. During the waiting period benefits 
were not adjusted for inflation. 
The last actuarial analysis of the Local Authorities Superannuation 
Fund was conducted in December 1993. The actuaries encountered 
serious data deficiencies, particularly with respect to dates of birth and 
accumulated contributions. Furthermore, no reliable data on the volume 
and contingencies covered by pension payments were available at the 
evaluation date. Thus the analysis had to be based on several assumptions 
with respect to the composition of members' age groups, income 
and contributions as well as pension payments. The actuaries concluded 
that the fund was substantially under-funded, even considering 
only minimum funding levels. 
Workers' Compensation Fund Control Board 
The Workers' Compensation Fund Control Board, administered by the 
Ministry of Labour and Social Security, was established in 1964 as an 
employer liability scheme to compensate workers for occupational 
accidents and diseases when they were injured or contracted diseases 
during the course of duty. There were 385,000 members in 2000. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA
Pneumoconiosis Compensation Board 
The Pneumoconiosis Compensation Board, also administered by the 
Ministry of Labour and Social Security, was established in 1952 as an 
employer liability scheme to compensate miners for invalidity arising 
from hazardous working conditions in the mines. This compensation 
was specifically for those who had contracted pneumoconiosis and 
tuberculosis in "Scheduled Areas". At the time of the study the Board 
had 18,000 members. 
The Board has always been associated with the mines because the 
expansion of copper production played an instrumental role in the 
emergence of pneumoconiosis (a disease of the lungs caused by habitual 
inhalation of irritant mineral or metallic particles) in the mines. The 
most serious disease is silicosis, caused by the inhalation of fine dust 
particles which contained silica. Although silicosis is incurable it can 
be managed through preventive measures. 
Before the establishment of the Pneumoconiosis Compensation 
Board in 1952, the increase of cases of pneumoconiosis in the mines 
alerted the Colonial Office in London, which called upon the Northern 
Rhodesia Government and mining companies to enact legislation and 
institute compensatory measures for miners who contracted such a 
disease. By 1944 several miners were suffering from the disease at 
Luanshya Mine. At Mufulira mine in 1949 a significant number of 
African and European miners were suffering from silicosis, with or 
without TB. 
Pressure from the British government resulted in the promulgation in 
1945 of the Mining (Prevention) of Silicosis) Regulation. After 1945 all 
mines were obliged by law to compensate African mineworkers who 
were suffering from silicosis, in accordance with the Workmen's Compensation 
law. In-1950 a Silicosis Bureau was established in Kitwe on 
the Copperbelt and in 1952 the Pneumoconiosis Compensation Board 
was formed. 
Private and voluntary occupational pension schemes 
Private and voluntary occupational pension schemes, usually administered 
by insurance companies and in-house arrangements, form the 
84 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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second tier of the formal social security system. These are supposed to 
complement the Zambia National Provident Fund (up to January, 2000) 
and, at the time of the study, the National Pension Scheme Authority. 
About 40% of formal sector employees are enrolled in these private 
and voluntary occupational pension schemes. Employees and employers 
belonging to these schemes may also become members of the 
National Pension Scheme Authority. 
Most of these private pension funds (about 75%) are managed by 
the Zambia State Insurance Corporation (ZSIC), which was the only 
insurance company between 1964 and 1991. The largest private occupational 
pension scheme is the Mukuba Pension Fund, originally owned 
and managed by the then State-owned Zambia Consolidated Copper 
Mines (ZCCM). The Mukuba Pension Fund was established in 1982 
and membership was originally obligatory for all permanent employees 
of ZCCM, but in 1985 membership became voluntary and fell sharply. It 
has since recovered and amounts to more than 18,000 members at the 
time of the study. The scheme is now administered by the Mukuba 
Pension Trustees Limited. Board members are appointed by the ZCCM 
and the Mineworkers Union. 
In March 1994 the fund had assets of US$5.3 million, of which 
US$ 1.5 million was invested in Treasury Bills and government bonds. 
Most of the funds were invested in property of high quality, which 
yielded high rentals and the scheme therefore performs well compared 
with all other formal social security schemes. Contribution rates are 
10.7% of basic monthly payment for the employer and 5% for employees. 
The retirement age is 55 for both men and women. 
The private schemes managed by the Zambia State Insurance Corporation 
were subject to prescribed investment under the previous 
socialist-inclined government before 1991. Their performance was, 
therefore, not much better than that of the statutory social security 
schemes. However, their performance has improved considerably due 
to the investment of the bulk of these funds in Treasury Bills. More 
private social security schemes have invested in real estate than statutory 
social security schemes have done. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 85
The Zambia State Insurance Corporation, which manages about 
75% of private social security funds, also offers three types of social 
security schemes, a defined-benefit final salary scheme, a moneypurchase 
annuity scheme and a group annuity scheme. 
The experience of the Zambia State Insurance Corporation with the 
annuity schemes had been unsatisfactory because of .unfavourable 
investment policies, inflation and an inability to change the annuity 
factors. Most of these schemes are being converted into fully-funded 
defined benefit schemes. The pension age is usually 55 years and for 
early retirement there is an actuarial benefit reduction. The schemes are 
not indexed for inflation and the contribution rates vary but typically 
they are 12.5% for the employer and 6.25% for employees. 
The Corporation has experienced great difficulty in collecting 
contributions from some employers. There has also been dissatisfaction 
with the low levels of benefits in real terms and with the lack of 
opportunity for the employer to influence investment decisions. At the 
time of the study the Zambia State Insurance Corporation managed 
schemes covering 28,000 active employees and about 3000 pensioners. 
The dependency ratio for private schemes is low because the numbers 
of pensioners compared to contributors is low. The reason for this 
is simply that very few people in private companies meet the eligibility 
conditions for pension because of frequent changes of employment. 
This would not arise in the case of the new National Pension Scheme 
Authority as pension rights will be preserved, irrespective of the 
number of times an individual changes employment. 
In conclusion, the above review indicates that the formal social 
security system has many problems which have made its coverage 
inadequate. The low levels of people's income, the absence of physical 
and social infrastructure and the limited administrative and human 
capital have inhibited the implementation of a strong and viable social 
security system that can effectively protect its members from falling 
into absolute poverty. 
Statutory and private social security schemes have all suffered, to 
various degrees, from constraints that include the following: 
86 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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On the part of the contributors: evasion and non-compliance; low fines 
for evaders; lack of opportunity for the employers and members to 
influence investment decisions. 
On the part of the schemes: members' benefits are inadequate and 
lump sum benefits are too low to be useful. Many schemes lack an 
insurance element and pension rights cannot be transferred. There are 
high actuarial deficits. 
On the part of management: deficiencies include unfavourable investment 
decisions, especially before 1991 and unrealistic interest rate 
policies. As a result of the failure to adjust contributions to the inflation 
index, investment income has been low. Ill-thought out schemes 
such as early retirement placed a huge burden on the pension schemes 
and reduced the balance invested. There was a high degree of political 
interference in the management of the schemes. The schemes have 
been under-funded as a result. Administrative expenses arising from 
overstaffmg, as many of the statutory (parastatal) schemes are also 
used for employment creation, have been high; auditing has been 
irregular and human resources are low, leading to data deficiencies. 
Macro-economic features contributing to the problems include the 
unwillingness of banks to deal with pension payments because they 
have not been backed by real funds; an insufficient number of regular 
wage-earners; a narrow tax base and limited coverage. 
Future formal social security schemes such as the new National 
Pension Scheme Authority should learn from the limitations of previous 
formal schemes and from elsewhere in the world in order to improve on 
them and serve the people better. This would make a significant contribution 
to society by going beyond a mere reorganization of a State-run 
social security monopoly. It would help to promote adequate pension 
coverage while enabling government to reduce spending and relieving 
it from the burden of running a huge, centralized, State-funded bureaucracy. 
In spite of the problems and limitations discussed, however, the 
formal social security schemes which do exist provide some benefits to 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 87
Table II: Profile of non-formal social security schemes in 
Zambia 
Contingencies covered Schemes 
Traditional schemes 
Extended family Births, initiation, marriage, famine, sickness, 
old age, death 
Accommodation, sickness, lack of money 
Semi-formal schemes 
Urban reciprocal networks 
and 
Church 
Chilimba 
Market associations 
foodstuffs, death 
Famine, sickness, old age, death 
Sickness, education, accommodation, death 
Sickness, education, accommodation, 
business, death 
their members who would otherwise have had to depend on non-formal 
social security schemes. 
Non-formal social security systems 
The study found two types of schemes of non-formal system, traditional 
schemes based on extended family, customary and kinship ties; 
and semi-formal schemes. These non-formal social security schemes 
shown in Table II, protect 95% of the total population. Other small and 
insignificant schemes like credit and saving clubs and women's support 
groups are not popular and widespread and were not, therefore, included 
in the study. 
Traditional schemes: the extended family 
Most people, especially in rural areas, depend on the extended family 
for their social security needs. In rural areas consecutive years of 
drought, economically and environmentally unsustainable agricultural 
policies and practices and the emergence of new market realities have 
created an environment characterized by rapid change, uncertainty and 
extreme poverty and many fanners lack the basic information and skills 
88 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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to adapt to these changes. In these circumstances the extended family, 
although weakened by social and economic pressures such as the 
structural adjustment programme, rural-urban migration, HIV/AIDS and 
poverty, is called upon to address many contingencies. Many people, 
particularly in rural areas, depend on the extended family as their only 
social security provider. More than 60% of the country's population 
live in rural areas; which have higher levels of poverty than urban areas 
and formal social security schemes scarcely exist there. 
The extended family is built on the cardinal principles of reciprocal 
aid among members, accompanied by complex rights and responsibilities. 
It is the basic unit of social cohesion and harmony and is 
designed to satisfy its members' human needs in face of the harsh and 
sometimes dangerous natural environment. It strongly values the following: 
• The importance of the larger kin group; 
• Co-operation among relatives; 
• Strong parental authority and importance of children; 
• Respect for the elderly; 
• Family care for the elderly, sick, infirm and orphaned; and 
• Child-rearing undertaken by a large number of relatives. 
The extended family has been in itself a social security system for all 
its members. Collective solidarity through mutual assistance within the 
family, clan and the tribe, as well as the care by family members for one 
another in times of need, constituted the boundaries of the traditional 
social security system for most people. 
The extended family has been a noble characteristic of African 
society especially at time of death, during disputes and in 
production and the up-bringing of children... At times of death, 
the children of the deceased were looked after by extended 
family.. .The children brought into the household of relatives were 
treated equally with those of that household... The members of 
the extended system participated in the production of what they 
consumed (Kayongo-Male et al., 1984:63). 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 89
This system is stronger in rural than in urban areas because the rural 
subsistence economy is essentially derived from land which is still 
communally owned and administered by village heads and chiefs for 
the benefit of all. In rural areas the extended family supports a longlasting 
unit including parents and their children, grandparents, cousins, 
nephews and other relatives living in the same household. Traditional 
social security is organized around the strong nucleus of kinship 
systems on the basis of mutual responsibility, reciprocity, altruism and 
compassion (Masiye 1995). 
This support is based upon culturally-determined patterns of mutual 
assistance. Each person within the family can expect support from 
other members but is at the same time obliged to help all others. If 
obligations are not met by individuals, they can expect sanctions from 
everyone else. The redistribution of goods forms a substantial element 
of this system where poorer households or persons can expect support 
by others. Survival in such circumstances depends less on one's own 
economic viability than on the economic situation of the community as 
a whole and on the relations one can turn to (Kirch et al., 1995). The 
extended family also helps to provide school fees, loans and savings, 
to construct homesteads and with communal tasks. People employed in 
urban areas send remittances in cash or kind to relatives in the rural 
areas and in return, rural relatives also send remittances in kind to their 
urban relatives. 
One threat to traditional social security has been the limited resources 
of rural households. As their resources dwindle, kinship and 
family no longer provide sufficient support to their members and in 
conditions of general deterioration even the richer members of the 
community have nothing left to spare. The urbanization process- also 
contributes to the weakening of the extended family in many ways. For 
example, the density and heterogeneity in towns encourage greater 
human contact and impersonal relationships. In turn, these impersonal 
and sometimes contractual urban relationships lead to deviations from 
traditional norms and customs which have bound the extended family 
together for generations. 
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Furthermore, the long distances between rural and urban areas preclude 
frequent visits among family relatives, while the high cost of 
living in urban areas made it impossible for townspeople to help or look 
after a large extended family. This has weakened the mutual aid and 
inclusiveness of the traditional extended family. 
Viability 
The extended family is a viable non-formal social security scheme, especially 
for rural people with no other alternative. Its viability depends 
on members' reliance on the natural pattern of personal relationships 
rather than impersonal institutions. If the factors that endanger and 
weaken the extended family can be addressed it could play a significant 
role in meeting the social security needs of its members, who constituted 
the majority of the population. 
Potential for strengthening 
The main factors which undermine the efficacy and viability of the 
extended family include: rural-urban migration; unproductive agriculture; 
poverty and HIV/AIDS. The strengthening of the extended 
family is, therefore, equal to the revitalization of the rural areas, particularly 
through productive agricultural investment and promotion of 
healthy practices and lifestyles. Productive agriculture, for instance, 
would provide food, employment, income, raw materials for industry to 
generate further employment, investment capital for other sectors of the 
economy and foreign exchange through the sale of surplus agricultural 
products. If people in rural areas had adequate food supplies, employment 
and income the pressure to migrate to urban areas would be 
reduced, the health of the people would be improved, reciprocal aid 
relationships would increase and individualism would be discouraged. 
Semi-formal schemes 
Although this report has treated urban reciprocal social networks, the 
churches and chilimba as non-formal social security schemes these do 
not, however, qualify as social security schemes in the real sense of the 
term, even though they meet some of the social security needs of their 
members. This is because their protection against a deterioration in 
standards of living is not guaranteed and because the payment of 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 91
premiums, in cash or in kind, is either weak or non-existent in all three 
systems. For this reason, therefore, only two schemes, namely, the 
extended family and market associations qualify to be considered nonformal 
social security schemes because they meet the criteria discussed 
above in the conceptualization of non-formal social security. 
Reciprocal urban social networks 
When wives and children move into town from the village, extended 
family relations are affected, especially when visits to the village or 
caring for the family members left behind are reduced because of the 
high cost of travel and urban life. These families build new social 
networks at the place of work, church, clubs and within their neighbourhoods. 
...wage labour often resulted in the formation of non-kinship 
groupings which began either to fulfill family functions or to force 
families to change their functioning. These groups include the 
more informal social networks...and voluntary associations and 
labour unions. Wage labour, whether in urban or rural areas, often 
drew together people from many different ethnic groups. Once 
communication was eased by the adoption of a standard language 
for all workers or by the creation of lingua franca, the formation of 
non-kinship groups was rapid. Labour unions were affected in a 
number of ways: first replacing some economic functions of the 
family but also forcing families to change internal sex roles and 
authority patterns (Kayongo-Male et al., 1984:39). 
These urban social networks largely replace some of the roles of 
rural extended family, particularly during temporary crises like sickness, 
death or the loss of a job. 
Epstein describes these sometimes close-knit urban social networks 
as being made up of: 
pairs of persons who interact with one another in terms of social 
categories and regard each other, therefore, as approximate social 
equals, ignoring the slight differences in social status there may 
be between them...The urban extended social network makes 
greater allowances for the gradation of social status and tends to 
92 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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cut across ethnic or other divisions. It provides covert or informal 
structure composed of inter-person links which spread out and 
ramify in all directions, criss-crossing not only the whole of the 
local community, but knitting together people in different towns 
and country" (Epstein in Mitchell 1969:110-111). 
Some of the relationships in urban social networks derive from ethnic 
systems while others are a product of more open organizations that 
exist in urban areas, such as reciprocal support groups and friendship 
networks. These networks provide informal social security to urban 
people who may have no links to any other social security system. 
Members of urban networks help one another in a variety of ways. 
They borrow and lend each other money or food. They put up one 
another's in-laws so as to observe the traditional rule that in-laws may 
not sleep in the same house and they exchange favours and support 
one another in times of need, such as accommodation, during sickness, 
on death and for ceremonies. In the process they develop general 
obligations to help one another. In contrast with extended family obligations, 
urban network relationships tend to be contractual in nature 
and therefore, depend strictly on mutual aid, obligation and reciprocity. 
Urban social networks have been used to cover many contingencies 
including job loss, funerals, sickness, political support and disputes. 
The study found that most of these networks assume an informal 
structure. However, those which are work-related, school-related, 
church-related and club-related tend to have semi-formal structures. 
Which social network the individual turns to for support depends on 
the nature of the problem. In some crises, however, more than one type 
of social network is mobilized to render specific support. In some cases 
different social networks combine to deal with or mitigate the effects of 
a crisis on an individual or family. 
While in rural areas traditional social security is sustained by and 
depends upon the extended family system, in urban areas non-formal 
social security schemes are largely sustained by and depend upon 
non-kin reciprocal social networks. 
Many urban people have learned to support one another in order to 
survive the harsh and sometimes dehumanizing urban environment. For 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 93
the urban poor, these networks are the only provider of social security 
and some are even afraid of returning to their villages of origin because 
they feel relatively secure with their new "extended family", based on 
urban social networks. 
Viability 
The networks described are viable as a provider of social security to 
urban people who do not have access to any formal social security 
schemes. However, such viability depends on the economic capacity of 
the urban residents themselves. During the period of economic boom 
(1964—1974), the provision of social security by urban social networks 
was much higher than it was in the 1980s and 1990s when people had 
little money. It follows, therefore, that the increased economic capacity 
of urban residents gives them extra money and resources to spend on 
social networks. 
They have the capacity to be mobilized quickly in response to a 
particular problem. The mix of different types of networks, such as 
neighbourhood and work-related social networks, increases their ability 
to support members in times of need. In spite of the reduced real incomes 
of the people in urban areas, however, most urban people 
depend on impersonal social networks at the place of work, church, 
clubs and neighbourhoods. 
Potential for strengthening 
Like the extended family in rural areas, these networks also have the 
potential to be strengthened; for example, by expanding the employment 
opportunities of urban people and increasing their purchasing 
power. The cornerstone of this strategy is to create employment and 
income-generating opportunities and for government to support to 
promote community-based social security initiatives. 
Church 
In both rural and urban areas, but especially in the latter where the 
extended family system is weak, the church contributes to the social 
security of its members. Among the contingencies which the church 
addresses are hunger, homelessness, sickness, old age and death. 
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Besides encouraging and supporting the development of non-kinship 
ties and networks, churches and non-governmental organizations have 
also been expanding their work into development fields, thus serving as 
intermediaries for small self-help and community development efforts, 
especially in the areas of poverty-reduction and social development. 
Viability 
This is another viable, non-formal social security scheme. However, a 
church, as a congregation or group, is only as strong as its component 
parts. If most of its members are poor the strength and capability of the 
church is equally limited and poor. 
Potential for strengthening 
There is a need to strengthen the capacity of individuals, households 
and communities in terms of improved access to adequate food 
supplies, employment, income, health and other life-sustaining and lifeenhancing 
resources and services so they can build strong churches 
capable of supporting their weak members. 
The study found that the most people belong to one non-formal 
social security scheme or another, since formal social security schemes 
are limited both in quantity and quality. However, the non-formal social 
security system in Zambia is weak and loosely organized. Only two 
non-formal social security schemes meet the criteria of being social 
security providers. These are the extended family and market associations. 
The burial societies and market associations that had existed in the 
Copperbelt during the colonial days were discontinued after the 
country's Independence. The philosophy of Humanism, entailing an 
elaborate system of the free provision of social services, combined 
with policies directing all employers to provide their employees with 
loans and funeral grants, combined to discourage the continuation of 
the pre-Independence burial societies. These also undermined other 
non-formal schemes such as the chilimba scheme and market associations. 
As a result, the study was unable to find exhaustive information 
on non-formal schemes in the country, apart from relatively new and 
loosely organized ones. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 95
The role of informal social security systems must be understood as a 
response to the many problems of vulnerability and social insecurity. 
Thus the community-based lending of money; the role of religious 
groups to help members through illness, bereavement and hunger; the 
support of the clan, market associations, informal relations and support 
networks based on the workplace and the reciprocal assistance in nonfamily 
based social groups should all be seen in this light. For a long 
time to come, these non-formal schemes will continue to provide limited 
social security to most people. They therefore need to be strengthened 
' so that they can play this role effectively and even expand. 
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Phase II: Chilimba and Market Associations 
ABSTRACT 
Phase II of the study was concerned with identifying two particular 
non-formal social security schemes. We selected for analysis the 
chilimba and market associations because they raised practical 
policy-related issues, seemed to address priorities, covered priority 
groups, (the poor and most vulnerable in urban and some parts of 
rural areas) and also addressed immediate and future needs, 
especially market associations. These are the non-formal social 
security schemes that have the most potential for strengthening by a 
policy regime that recognizes each individual's need to have some 
form of social security, identifies non-formal security schemes and 
their members' needs and then offers training in basic skills of 
leadership and management, business and entrepreneurship and 
expanding employment opportunities so that more people can earn 
enough to pay for formal social security. 
Chilimba 
The word chilimba means strengthening. It derives from the Nyanja 
and Bemba words "kuiimba" and "ukulimba", respectively. In practice, 
chilimba is a self-help way of assisting those who are unable to 
raise the money required either for business or buying household items. 
Chilimba started as an informal rotating credit and savings (without 
interest) scheme that provided mutual assistance among poor male 
labour migrant miners on the Copperbelt of Zambia during the colonial 
period as a means of coping with the perennial problem of lack of 
money. The contingencies covered ranged from buying personal items 
to meeting funeral, educational, transport and medical expenses. At this 
stage, only men participated in chilimba because only they were 
allowed to reside in the Copperbelt were employed. Epstein (1981) 
observes that as soon as Africans assembled in towns and engaged in 
industrial work they began to form social relationships appropriate to 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 97
Table III: Distribution by gender of chilimba group members 
Gender Number % 
386 Women 
441 
88 
100 
SOURCE: FIELD DATA 
Total 
their new situation. For example, tribal elders representing different 
ethnic groups and chilimba credit scheme emerged in mine townships. 
In practice, chilimba means lending another person the whole or 
part of your wages for a period (for example, one month) and receiving 
it back, together with the other person's equal and reciprocal contribution, 
the following month. At the time of the study it was found that 
more women than men were participate in chilimba. 
This was true both among those engaged in selling at the markets in 
rural and urban areas and those who were organized solely for the 
purpose of raising money for domestic use. This is because there are 
more women than men in the informal sector although more men are 
entering it as formal sector employment opportunities are narrowing, 
mainly as a result of business closures stemming from the economic 
restructuring process. At the time of the study, however, men who were 
out of formal employment were still hoping to rejoin it. They had not 
yet decided to start creating long-lasting reciprocal relationships like 
those required by chilimba. 
Although the system of chilimba initially came about as a result of 
the poverty of the African mine migrant labourers on the Copperbelt, 
Table IV: Reasons for joining a chilimba group 
Reasons Number % 
300 To raise money 68 
No interest on contributions 56 12 
No security or collateral required to join 47 11 
38 You can stay in the group as long as you want 9 
441 Total 100 
SOURCE: FIELD DATA 
NOTE: THIS NUMBER INCLUDES THOSE WHO WERE ENGAGED IN CHILIMBA FOR ITS OWN SAKE AND 
THOSE WHO USED IT WHILE OPERATING IN MARKET ASSOCIATIONS. 
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the system has spread to other urban areas. During the period of economic 
boom the practice of chilimba decreased but from the 1980s it 
came back with renewed vigour, when it began to be used for raising 
money to meet different needs such as education, medical fees and 
rent. The assistance is usually seen as primarily social terms as no 
interest is charged and the scheme remains informal. 
Table IV shows the reasons given for joining a chilimba group. 
More than half of the respondents (68%) joined to raise money. For 
those who were working in markets the money raised is used mainly to 
expand their businesses, as indicated by the following remarks from two 
women: 
Chilimba enables me to raise money so that I can expand my 
business. I am able to buy more goods for sale and by doing so I 
make more profit than I would otherwise make without belonging 
to the chilimba group. Without chilimba / would have been 
out of business a long time ago. 
I joined chilimba as a means of saving money and increasing my 
business capital" 
Those who join other chilimba groups outside the markets do so to 
raise money to pay for household items, medical and school fees. 
Another reason is because no interest is payable on loans and no 
security or collateral is required to join the chilimba group (23%). The 
following remarks convey the general feeling: 
/ did not want to end up with the problems 1 would encounter if 
I failed to pay interest on loans from other organizations. 
We do not go to lending institutions for fear of losing our property 
if we fail to pay back the interest. 
Chilimba is better than borrowing money from banks or from the 
non-governmental organizations that lend money to women in 
markets because in chilimba groups you are not expected to 
enrich the lender; only yourself. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 99
/ am very comfortable with chilimba because,if I fail to contribute, 
when my time comes to collect, I simply do not collect and 
only miss one turn. There is no penalty for that. 
I am not educated and I do not know how to get a loan from 
established institutions. 
We fear losing our household property to organizations that 
would lend us the money due to the interest required. 
Iwouldrather go for chilimba than a loan'from a bank or from a 
non-governmental organization because instead of progressing 
you spend most of your time servicing the loan. 
Nine per cent of respondents said they had joining because they could 
stay in a group as long as they wanted. Chilimba was effective as long 
as all members of the group were honest, hardworking and had the 
ability to pay their contributions. Other remarks were 
Although no specific number of people is required to form a 
chilimba group it is, however, better to have not more than ten 
people in order to reduce the waiting time for a member to 
collect the group's contribution " and 
"The recommended number of chilimba group members is 4 to 
10. There are usually problems when there are more than 10 
members " 
The study found that the chilimba scheme had been transformed into 
a popular grassroots-based savings and credit scheme and that some 
% 
Table V: Key factors for the success of chilimba scheme 
Factors Number 
37 
28 
16 
12
7 
100 441 
Reciprocity, honesty and trustworthiness 161 
Ability to pay for the contribution 122 
Respect for other group members 71 
Hardworking 53 
A good network of members 34 
Total 
FIELD DATA SOURCE: 
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Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
of the problems members associated with a large group were dishonesty 
and defaulting. Its success, as shown in Table V, appeared to 
lie the limits attached to membership which allowed for a high degree of 
intimacy and, therefore, a fair amount of trust. By pooling their limited 
individual resources members were able to support one another in 
various ways. 
The degree of participation in a chilimba group was determined by 
the nature of the individual's financial need and also her level of income. 
How wages were paid was also critical. If employed people 
received their wages weekly the chilimba practice was widespread as 
everyone needed to pool resources to purchase items that could not 
be bought on an individual's weekly wage, especially under conditions 
which did not allow savings. Thus such items as bicycles, sewing 
machines, a radio, relatively expensive clothing and raising money for 
social functions like weddings was generally made possible. 
Although initially chilimba did not involve written-down rules and 
executive leaders the study found some chilimba women's groups with 
both. 
In one group that was interviewed, 12 women came together under a 
chairperson, secretary and treasurer. They agreed to contribute K35,000 
each per month. The group's financial resources were mobilized by the 
treasurer and passed on to a group of three each month. To harness 
more than just the group members' resources, friends were invited to a 
monthly party and encouraged to bring presents. A group of twelve 
could, therefore, benefit from as many as 100 to 150 friends and relatives. 
The emergence of such groupswas also the result of a liberalized 
economic environment which had made market goods available. 
As men lose their jobs women take up informal trading in order to 
survive and raise their children. Such trading groups obtain capital 
through chilimba. A common practice is for women traders to contribute 
K 1,000 every day for a week. At the end of the week the amount 
collected is given to one of them to replenish her stock or cater to some 
other need. The women involved in chilimba groups tend to be more 
'serious over meeting their obligations to others than would generally 
have been the case with money borrowed from non-members. 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 101
Potential for strengthening 
Although the chilimba is useful, however, it does not constitute a real 
social security scheme. Nevertheless it has the potential for being 
strengthened as long as it remains informal or semi-informal. The 
formalization of the chilimba scheme into, for example, an non-governmental 
organization, presents a possible danger of creating cleavages, 
ultimately leading to its collapse. What appears to be the way forward 
is to encourage many women as well as men to form such groups under 
their own informal control. 
It could achieve more if the resource base were improved and women's 
management skills were enhanced by formal training. The success of 
the scheme depends on its being run by direct beneficiaries without 
outside interference but government could help by providing a policy 
environment that encourages and supports community-based nonformal 
social security schemes to widen their scope and coverage. 
Market associations 
Between 1964 and 1991 all markets were run and controlled by the 
United National Independence Party and their main function was to 
mobilize mass political support for the Party. Since 1991 a few market 
associations have produced constitutions and rules with the aim of 
promoting their member's interests. They have created a common fund 
which they use to help members with such contingencies as sickness, 
birth, death, education and the payment of rent. 
The market associations that existed before Independence were 
revived because of the numerous hardships that were being faced by 
poor peri-urban and rural people, large numbers of whom had experienced 
a sharp decline in their livelihood and food security during the 
1980s as a result of economic liberalization and the reduced role of government 
in the Third Republic (1991 -2001). In particular, the contraction 
of the formal sector workforce from 23.9% to 9.8%, devaluation of the 
currency and rapid inflation, the removal of subsidies for basic food 
and the decline of health and education services had, in peri-urban 
areas, precipitated a crisis which resulted in a low quality of life. 
102 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
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This was characterized by the growth of illegal compounds and poor 
quality homes; poor access to a clean and safe water supply; limited 
access to social services; low levels of community-based organization 
and participation and the use of pit latrines. Poverty was shown by the 
use of expensive charcoal as cooking fuel and paraffin being retained 
as the main source of lighting; spending most of the household income 
on food and housing; eating one or at most two meals a day and a high 
prevalence of stunting and underweight, especially among children; 
together with a high dependency ratio. Work was mainly to be found in 
the informal sector; there was increased reliance on neighbours or 
relatives for credit and a correspondingly limited access to individual 
assets and consumer durables. Finally, there was a significant number 
of children with no access to education. 
Most people in these peri-urban areas, therefore, resorted to informal 
sector trade. As a result urban markets became full and the need to 
maintain order in the markets and address the needs of marketeers led 
to the formation of market associations with registered membership. 
Some of these associations have produced operating modalities with 
elected leaders, constitutions, sets of rules and forms of training. They 
are also registered with the government. Most, however, are still semiformally 
organized. There is no differential coverage by gender but 
geographically, market associations are more prevalent in urban than in 
rural areas. In rural areas they are restricted to provincial and district 
towns. The poorer the market, especially the rural market, the more 
loosely organized the association is. 
The main goal of these associations is to look after the needs and 
welfare of their members. They are intended to meet contingencies such 
as sickness, education, accommodation, business and death. At the 
Lusaka City Market, for example there are two semi-formal social security 
schemes, Proud Africa and Take Care. Both were established in 2000 
with government assistance. Interested marketeers were trained for six 
weeks, after which they are given loans of K270,000 each. Those who 
are trained are put in groups of five, with each member contributing 
K40.000 per week. After six weeks a member qualifies for a loan from 
the Association. If the member who is given the loan is successful then 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 103
the amount given out in the initial loan is increased to K500,000. It was 
not possible, however, to establish exactly how these two schemes 
operated. 
On the Copperbelt in Kitwe, the study found a market association 
that had formed a funeral committee with rules for members in 1998. This 
was based on the realization that funerals are often unanticipated and 
always costly. At the time of the study, membership of the market 
association was open to anyone working in the market but plans had 
been made to restrict membership to only those people who had a 
stand and were willing to pay a membership fee. The study found the 
funeral committee was concerned with funerals that took place at the 
member's home. The committee collects donations from members in the 
form of money and food and takes this to the funeral house. The plans 
which the market association discussed with the research team 
include: 
• Extending funeral support to family members and dependants of the 
registered members of the market association; 
Giving money the collectors allowances for lunch, transport and rent 
for their market stands and 
• Making every member contribute Kl 000.00 per week. 
Both men and women were members of market associations. In one association 
in Lusaka, for example, there was a chairman and chairwoman 
as well as a vice-chairman and a vice-chairwoman. 
In general, the study found fewer market associations with a funeral 
committee than those which did not, but most had a market fund to 
which all the members contributed and incorporated chilimba practices 
in their work. 
Viability 
As a result of extreme levels of poverty and the frequency of funerals 
people do not attending funerals as much as before. With the support 
of market associations, however, it is easier for the bereaved to feed the 
mourners and also maintain a good number of people to help them with 
the funeral till the day of the burial. The fact that these market associations 
existed before and that people were entering markets to make a 
living gave them the potential to succeed in addressing social security 
104 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Mukuka, Kalikiti and Musenge /ZAMBIA REPORT 
contingencies. The study, however, found no linkages between market 
associations and the formal social security system in the country. 
Market associations, like chilimba, were also found to be oriented 
towards meeting both immediate and the future needs of their members. 
In two rural areas of Chipata and Mansa in Eastern and Luapula 
provinces respectively, it was found that the people working in markets 
had a market fund to address the needs of their members. A market 
fund operates like insurance and the members' contribution is the 
premium for the benefits that members receive or expect to receive from 
their associations. These markets also had been using chilimba. It was 
also found that in the two rural provinces there was a higher mix of 
schemes than in urban provinces for the mobilization of support when 
need arose. This usually consisted of a combination of the market fund, 
chilimba and the extended family, depending on the nature and severity 
of the contingency. 
It was because members have to pay a premium and social protection 
is guaranteed that market associations can be considered social 
security-providing schemes. They were selected for in-depth review 
because they were readily available and found in both urban and rural 
areas, at least in provincial and district capitals of all provinces in the 
country. 
Weaknesses 
It was reported from both urban and rural market associations that, 
because of high levels of poverty, members' contributions were insufficient 
to meet their increasing security expenses or to sustain the 
remaining family. It was also reported that there had been cases when 
members of the market associations had lied about having a funeral in 
order to get funeral donations. When such cases are discovered they 
tend to demoralize members and discourage them from further contributions, 
even for a genuine funeral. The associations explained that 
they were still learning and that, in future, cases of cheating would not 
take place, as the associations would have the capacity to conduct 
physical checks at the funerals reported. 
Potential for strengthening 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 105
The market associations have the potential to be strengthened, especially 
since they have worked successfully before in similar conditions. 
They also have the potential to work in the rural areas, where the only 
viable social security provider that exists is the extended family. 
There is, therefore, a need to improve the market infrastructure itself 
first. Members and the leaders of market associations need to be trained 
in basic skills of cooperative organization, business development and 
management, record-keeping, pricing, marketing and stock-taking. This 
would enable them to make more money. Some of their members might 
even graduate into small and medium-scale business enterprises, which 
would not only give them additional income but also enable them to 
employ other people and, in turn, contribute to the reduction of unemployment, 
poverty and insecurity. 
Conclusions and recommendations 
Formal social security 
Formal social security is guaranteed social protection against social 
distress, based on cash premiums. It covers the limited number of 
contingencies set out in the ILO's definition. In Zambia it targets only 
the 5% of the population in waged employment. As a result non-formal 
social security system on which most people depend should be the 
focus of expansion and strengthening. No deliberate gender bias was 
found in any of these schemes, although formal social security schemes 
had fewer women members than men because of other biases stemming 
from culture, socialization, education and employment. It was not 
possible, however, to get a gender breakdown of recipients of formal 
social security schemes because the data were not disaggregated. 
These schemes should be encouraged to disaggregate data by gender 
and improve their data collection, storage and retrieval systems. Their 
members should be allowed to transfer their pension rights in search of 
better performance and quality. Political interference should be reduced. 
Employers and pension scheme members should be able to influence 
investment decisions. Tough and enforceable penalties need to be 
legislated for evaders. Annuities should be indexed to inflation and 
pension scheme members should be able to ascertain the value of their 
106 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Mukuka, Kalikiti and Musonge /ZAMBIA REPORT 
pension. Employment opportunities should be increased so that more 
people have access to formal social security. 
Non-formal social security is a collective provision of guaranteed social 
protection through risk-sharing and pooling resources. It differs from 
formal social security in that it provides for an unlimited number of 
contingencies and the premium is generally received in kind, not cash. 
Among the five schemes of non-formal social security examined (the 
extended family, urban reciprocal social networks, church, the chilimba 
and market associations) only the first and last meet the criteria for 
being regarded as social security-providing schemes. 
It is necessary to encourage and support community-based social 
security schemes. This includes making policies that are deliberately 
aimed at developing, recognizing and supporting community-based 
social security schemes and integrating social security issues into the 
mainstream discourse on national development. This would involve 
adopting a two-pronged approach to enable government to expand 
formal sector employment while encouraging the development of 
community-based, non-formal schemes. 
Recognition, links and support 
• Studies should be mounted to explore the modalities of formalizing 
non-formal schemes with potential, like burial and market societies. 
• Links between formal and non-formal systems should be set up and 
policies put in place to improve the latter. Formal schemes should be 
encouraged to guide and train promising non-formal groups such as 
market associations and burial societies. 
• General training and support programmes should be developed for 
non-formal social security schemes, to help to widen coverage. Their 
structures and operating systems need to be improved. 
Non-formal systems 
There are two types of non-formal social security systems; the 
traditional scheme, represented by extended family and based on 
customary and kinship ties; and semi-formal schemes, represented by 
urban reciprocal social networks, church, chilimba and market associations. 
All non-formal systems should be supported by expanding 
VOL 17 NO 2 JULY 2002 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA 107
opportunities for training in basic skills, food security; employment and 
income generation, literacy and health services, infrastructure, development 
and agriculture. Finally, the extended family has always been themain 
provider of social security in Zambia. The institution of the family 
therefore needs to be strengthened. 
Semi-formal systems 
These are weak and loosely organized. It is necessary to strengthen all 
such schemes, including reciprocal urban social networks, churches, 
chilimba and market associations which serve most urban people. A 
priority lies in identifying the real causes of poverty and implementing 
anti-poverty programmes. Policies promoting the economic expansion, 
employment and income-generating opportunities will generally reduce 
poverty levels and allow more people to join formal social security 
schemes. More specifically, policy regimes should create a framework 
to provide a context and structure for non-formal social security 
schemes and to link them to formal structures and programmes in order 
for them to access other resources and support. 
Rural social security 
More than 60% of the population live in rural areas with higher levels 
of poverty than urban areas and without any formal social security. As 
agriculture is the basis of any independent development, concentrating 
on agriculture and rural development will slow down poverty, ruralurban 
migration and chronic social insecurity. The non-formal social 
security schemes that have the most potential for strengthening are the 
extended family, chilimba and market associations. Social security, 
whether formal or non-formal, can be strengthened by a policy regime 
that recognizes each individual's need to have some form of social 
security, identifies non-formal security schemes and their members' 
needs and then offers training in basic skills of leadership and management, 
business and entrepreneurship and expanding employment 
opportunities so that more people can earn enough to pay for formal 
social security. 
108 JOURNAL OF SOCIAL DEVELOPMENT IN AFRICA VOL 17 NO 2 JULY 2002
Mukuka, Kalikiti and Musenga /ZAMBIA REPORT 
Finally, the baseline of information on both formal and non-formal 
systems of social security, which this study has attempted to provide, 
is to be built upon by future studies. In spite of the limitations of 
| analysis and documentation, this study has provided useful answers to 
f the questions asked at the. beginning. It is, therefore, hoped that it has 
helped to place the question of formal and non-formal social security 
systems at centre stage of national development. 
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