Zambia: Moving forward with strong economic growth
With 11.5 million people, one-half of which are concentrated in small urban zones, Zambia is one of Sub-Saharan Africa’s most urbanized countries. Unemployment and under-employment are serious problems, income levels are low, and mortality rates remain high but the country’s national GDP (which has placed Zambia among the world’s poorest nations) has actually doubled since independence.
In 2012, growth in real GDP accelerated to 7.3% from 6.8% recorded in 2011 while inflation declined to an annual average of 6.5% in 2012 from 8.7% in 2011. And, in the next two years, growth is expected to remain strong and inflation low.
This recent economic growth spurt can be attributed to the following: legislative reforms, an improved political stability, a growth in tourism, and open capital markets which have allowed for the expansion of Zambia’s export sector, and renewed interest by investors in areas such as agriculture and copper mining.
Mining for growth
According to the World Bank, Zambia has the largest known reserves of copper in Africa, making up 6% of the global resource. As a result, developed countries such as China are depending on the production of copper in Zambia to cater to their electricity demands. This has meant a boost to the Zambian mining industry, with increased investment and activity.
According to Zambia KPMG senior partner, Jason Kazilimani Jr, the completion of several major copper mining projects in Zambia next year is expected to contribute to an economic growth of 8.1% from 2014 to 2016. By 2015, yearly copper production of the Kansanshi mine, for example, is predicted to reach about 400 000t, a major achievement that will ensure the mine reaches it one-million tons of total copper production by 2017.
Kazilimani notes, “copper production in the country peaked in the 1970s at 700 000t and gradually declined to 255 000t by 1998, as a result of depressed prices and under-investment in the then State-owned industry. However, as copper production soars on the back of the completion of major projects and also because of the development of the new Trident mine… Zambia is set to be at the peak of copper production once again.”
Although the age and state of road and rail infrastructure is a challenge for the industry, these are also opportunities to drive growth in the mining industry, allowing foreign investors and independent contractors to be involved in the government’s investment drive. Renewed investor confidence has been aided by the Zambia Chamber of Mines that have been outspoken on issues such as the tax regime and how it affects mining companies. For Kazilimani, “such potential [for investment] in the Zambian mining sector stands as an example to all African countries that when you have political stability, sound economic policies and commit to infrastructure development, global investors will take notice and development will follow.”
Agriculture – a major driver for growth
Along with mining, agriculture has shown steady growth over recent years. Helping to position Zambia as a regional food basket for SADC countries, the agricultural sector contributed 19.2% to Zambia’s GDP in 2012, “recording high production levels in crop and livestock segments.” “Maize is at the hub of crop farming in Zambia, whereas the livestock sector is mostly dominated by cattle breeding and poultry rearing.” (James Kunda, Times of Zambia)
Recognising the importance and success of the agricultural sector, the Zambian government has allocated large portions of the national budget (though some argue not enough) to improvements in this field, including projects to develop irrigated agriculture, promote conservation agriculture, and ensure disease control. This is all with a view to ensuring national food and nutritional security, mitigating poverty levels, and creating jobs, boosting the economy.
The way forward
The future looks bright for Zambia. However, analysts have agreed that the country’s growth will remain redundant unless there is a corresponding increase in job creation and progress on poverty reduction and tackling the HIV/AIDS pandemic. Ultimately, manufacturing activity, driven by the private sector, and directly or indirectly linked to the harnessing of natural resources, will be critical to the country’s long-term prosperity.
Speaking this year at the Zambia Round Table forum on investment, Kennedy Bungane, Barclays Bank Africa Chief Executive and Head of ABSA Group, described Zambia’s economic programme as one the best in Africa and a powerful story that inspires investor confidence, “There is no better, confident way of telling the African economic recovery story than through what we are seeing in Zambia. The Zambian story is a powerful message that tells us that Zambia’s rise, Africa’s rise… is no longer an illusion but a measurable factor that business can see.”
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