Zambia: UNDP Flagship Report Says a Diversified Economy will Spur Inclusive Development and Poverty Reduction

By Brenda Zulu

Zambia's latest Human Development Report urges the country to diversify its economy through prioritisation of its manufacturing and agricultural sectors. The report reveals that these sectors have created productive employment at a much faster pace than mining, and indicates that increasing productivity in these sectors is likely to lead to a path of inclusive development and poverty reduction.

The 2016 Zambia National Human Development Report (ZNHDR), launched by the United Nations Development Programme (UNDP) country office today, argues that for industrialisation to drive growth, policies for targeting strategic industries need to be explored locally. The Report was produced by UNDP in conjunction with the Zambian government.

Its theme, “Industrialisation and Human Development: Poverty Reduction through Wealth and Employment Creation” is informed by the recognition that industrialisation offers unique opportunities for development, and that Zambia’s overall human development may well be shaped by the path of industrialization that the country pursues.

The purpose of National Human Development Reports is to stimulate the industrialisation debate in Zambia, foster change and catalyse action for national development. Zambia has produced six National Human Development Reports, the last was in 2011. The current Report is the seventh in the series and presents quantitative and qualitative data on the state of Zambia’s industrial sector and proposes ways to make industrialisation more supportive of human development in the country.

Among several recommendations, the  report states that the core of Zambia’s economic industrialisation  strategy should be a set of interlinked and integrated policies, ranging from human and educational development through to microeconomic and infrastructural support; all designed to promote the growth of the  industrial base and in turn reduce the dependence on copper production and revenue.

Other recommendations are that future industrial policy should focus on accelerated investments in research and development and human capital accumulation, with particular emphasis on science and technology skills. In this manner, labour can contribute to the development of Zambia's value-added sectors, as well as provide the basis for exploring profitable opportunities in new markets. Also, the expansion of secondary industry in Zambia requires strong, transparent, and efficient institutions within a supportive regulatory environment.

“We have experienced over the last year the challenges of dependence on a single major revenue base - copper; on a single major energy source - large-scale hydro; on a single major agricultural product - maize - and on top of that, lack of value addition in our productive sectors. Historically, Zambia’s economic growth has been led by copper mining. Other sectors such as agriculture and value-added manufacturing have received less attention, either from public or private investment.  And the supporting infrastructure and logistical network, and the educational and training base, to enable those industries to develop at a lower cost have also been missing,” says Janet Rogan, the UN Resident Coordinator and UNDP Resident Representative in Zambia.

Ms. Rogan said it is by creating productive employment that individuals improve the quality of their lives, and those of their families and communities. “Investment in value-added sectors through industrialization is a strategy the government can pursue and can lead in order to attract investment which in turn creates productive employment,” she said. 

Launching the Report today, Zambia’s Vice President, Inonge Wina said the government is firmly committed to the diversification of Zambia's economy through increased participation of other sectors in growth generation.

“The government has continued to address challenges faced by micro, small and medium enterprises such as access to finance, markets and technology, and the development of entrepreneurial skills. These interventions are expected to spur enterprise growth and contribute to job creation,” the Vice President said in a keynote speech delivered on her behalf by the Minister of Commerce, Trade and Industry, Margaret Mwanakatwe. 

Zambia is classified as a Medium Human Development nation and is ranked 139th out of 188 countries globally.  Several factors have placed Zambia in the bottom quartile of the world’s human development rankings. These include stunted per capita incomes which have kept poverty levels high, low fiscal expenditure in health of about 5 per cent of GDP, education and social protection, and poor access to rural health and education amenities.

The Zambian economy has grown at an average of 7 percent over the past decade, one of the fastest in Sub-Saharan Africa. Yet, the benefits of growth have been unevenly distributed; poverty and inequality levels are high in Zambia and, most importantly, of the economy's over-reliance on a single commodity to a single market.