MADE IN-HOUSE
To boost local production and wean Zambia off its dependency on imports, there needs to be greater focus on a change in mindset, a reform of the legislative environment, and cheaper access to capital for producers.
Many will say that Zambia is “land-linked," not “land-locked" and its geographical location, a nexus of eight countries, endows it with great opportunities; champions of industry attest it can become the export hub of the southern and eastern African regions. However, these extensive linkages are more than not often used to bring wares into the country than to send them out. In fact, the current share of domestic products and services consumed by the public and private sectors is exceptionally low, varying from 4-5% in the mining sector to 15-25% in others. Indeed, Roseta Chabala, President of the Zambia Association of Manufacturers (ZAM), highlighted that Zambia has a long history of choosing foreign goods over those produced locally, with the government notoriously quick to import everything from protective clothing to school desks. Chain stores, similarly, prefer to stock goods from South Africa, China, and India rather than Zambia.
Sourcing products from abroad instead of investing in the country's production adds to the forex drain and ultimately results in a long-term balance of payments deficit for the country. Moreover, other key macroeconomic advantages to stocking local products include increased innovation and competitiveness among local companies, lower production costs, more value chain linkages across different industries, and the generation of downstream support service industries. Buying locally reduces delivery time, cost, and paperwork, eliminates the need for bulk buying and tying up working capital, and facilitates procurement processing and access to after sales service.
Progress, however, is being made. According to the Zambia Development Agency (ZDA), the manufacturing sector in Zambia accounts for about 11% of the country's total GDP, which has grown at an average of 3% over the last five years and can be largely attributed to the agro-processing and textiles industries. There are also several areas of focus necessary to increase the consumption of domestic goods. The first of these is the need to change the mentality that all that is local is sub-standard. If Zambians want to buy “Made in Zambia" products, the market for such products could grow. The second relates to policy and regulation. Many have called for reviews to The Citizen's Economic Empowerment (CEE) Act of 2006 and the Public Procurement Act of 2008, which do not contribute to the economy in terms of employment, training, or procurement in the way they were intended to. The Minister of Commerce, Hon. Margaret Mwanakatwe, agrees that both the CEE and the procurement act need reform. “The CEE has, in the past, been an equity push, but we are changing now, to go toward value chain development," she said
The third area that will be key to the realization of this ambition is access to financing. Several strategies have been suggested, such as special financing windows for small businesses and a more concerted effort on the part of the banking system to pay more than just lip service to facilitating SME growth. Market penetration for SMEs in Zambia is generally low, partly due to market informality, but also in large part due to high costs of borrowing. As Leonard Haynes, CEO of First National Bank (FNB) Zambia, told TBY, “The Bank of Zambia's reports show that credit extension in kwacha has actually reduced over the last two years across banks… At the moment, deposit rates are high and the FNB is cautious about lending at high rates, which is irresponsible and not conducive to strong sustainable relationships with customers. Increased liquidity will be crucial to bring down these rates." Other banks have emphasized the importance of offering training in financial management, as well as loans, to SMEs.
Some vital initiatives, such as the Business Linkages Champions forum launched by PEPZ, are targeted at more coordinated efforts between SMEs and corporates. They provide a common space for reviewing outdated policy and ensuring that the voices of all actors are heard. There is a substantial need to build the local production base before the idea of being able to take advantage of Zambia's advantageous land-linked topography can become a reality.
MADE IN-HOUSE
TABLE OF CONTENTS
Year In Review
What A Year
Zambia has long been a bastion of stability in Southern Africa, and while its economy has been rocked in recent years by the falling value of copper prices, a devaluating kwacha, and high inflation, through the Economic Recovery Program the government has bold ambitions to right the ship.
read articleReview
Convoke, Confound & Collect
Squeezed between a rock and a rather hard place by the slowdown in Chinese demand for copper, by far Zambia's biggest export and government-revenue generator, President Lungu has been forced to get creative in his country's alliances to broaden revenue streams and lessen its dependence on the vagaries of one foreign market.
read articleGuest Speaker
Dr. Stergomena L. Tax, Executive Secretary, Southern African Development Community (SADC)
TBY talks to Dr. Stergomena L. Tax, Executive Secretary of the Southern African Development Community (SADC), on regional economic development, boosting pan-continental free trade agreements, and improving security through mutual development.
read articleInterview
Susan Sikaneta, Ambassador, Zambia to Ethiopia & Permanent Representative to the African Union and Economic Commission for Africa
TBY talks to Susan Sikaneta, Ambassador of Zambia to Ethiopia & Permanent Representative to the African Union and Economic Commission for Africa, on championing peace across the continent, advancing women's rights, and promoting Pan-Africanism.
read articleInterview
Sebastian C. Kopulande, CEO, Zambian International Trade & Investment Centre (ZITIC)
TBY talks to Sebastian C. Kopulande, CEO of Zambian International Trade & Investment Centre (ZITIC), on taming austerity, stimulating sustainable growth, and creating the framework to support entrepreneurship
read articleFocus: Zambia Plus
Adding it All Up
On October 20, 2016, at the 2017 Budget Address, Finance Minister Felix Mutati launched the government's economic recovery program, christened "Zambia Plus." The program is designed to spur domestic productivity, through strengthening ties and collaborating with external donors and developers.
read articleReview: Banking
Macroeconomics Rule the Roost
In its ongoing efforts to diversify away from one principal commodity, copper, the government fosters the development, standardization, and efficacy of the private sector. In doing so the systematic support of the financial universe, especially banks, is vital, as is the goal of financial inclusion.
read articleFocus: SME Growth
IMF support program
An IMF support program stands to provide Zambia with some much-needed discipline on its expenditure and operational efficiencies; however, many caution the need for Zambia to determine what it wants to achieve and how the program will benefit the country.
read articleInterview
Christabel M. Banda, Executive Director, Insurers Association of Zambia (IAZ)
TBY talks to Christabel M. Banda, Executive Director of Insurers Association of Zambia (IAZ), on the evolution of the local insurance landscape, raising awareness, and tackling challenges in the sector.
read articleFocus: Solar
Sunny Side Up
As power demand continues to rise and power production continues to fall behind, it's the same old story for Zambia, still wrestling with an ongoing energy crisis. Public- and private-sector drives are seeking to mitigate this deficit by activating the country's solar industry.
read articleInterview
Margaret K. Chalwe-Mudenda, Director General, Zambia Information and Communications Technology Authority (ZICTA)
TBY talks to Margaret K. Chalwe-Mudenda, Director General of Zambia Information and Communications Technology Authority (ZICTA), on new projects, the ZNDC, and expectations for the year ahead.
read articleInterview
Hon. Dora Siliya, Minister, Agriculture
TBY talks to Hon. Dora Siliya, Minister of Agriculture, on the investments being made in agriculture to enable agricultural households, diversifying Zambia's basket of produce, and making international markets more accessible for local producers.
read articleInterview
Hon. Charles R. Banda, Minister, Tourism and Arts
TBY talks to Hon. Charles R. Banda, Minister of Tourism and Arts, on the wealth of tourism destinations within Zambia, efforts to bring more visitors to the country, and what the Tourism Development Fund will contribute to developments.
read article