Energy Watch (Hydro Power)

Copperbelt Energy Corporation has begun the construction of the 40 Mega Watts (MW) Kabombo Gorge hydro-power project in Mwinilunga to cost about US$160 million. The project will create 1,000 temporary jobs during construction and is expected to be completed in four years time. It comes with a price of displacing 115 households at Kamikezhi area. In recent years electricity demand in Zambia has been on the rise as the economy grows. This has exerted pressure on the current available supply with national installed capacity of 1,730 MW significantly below demand which is well over 2,000 MW. The construction will do little to narrow that gap.

Talking unemployment without solutions..

A recent IMF high-level international conference co-sponsored by GRZ, ILO, and the IMF to discuss solutions for sustained, broad-based, and employment-intensive growth appears to have drawn blanks - with no clear policy outputs. Whilst acknowledging the urgent need for a solution, the participants appear only to suggest the following :

"Unemployment has grown across the world since the onset of the global financial crisis...There is now a need to incorporate employment creation into the formulation of macroeconomic policies to improve employment outcomes. That is why the ILO and the IMF are supporting this national dialogue"

- Martin Clemensson (ILO)

“Growth and jobs are inseparable, and Zambia must invest in social protection, diversify its economy, and reduce its dependency on copper”

- Jaap Wienen (ITUC)

“We need to steer employment creation in the right direction. For that we need coherence and balance across policies, as well as coordination and dialogue among institutions and stakeholders. This conference has marked an important step in that direction”

- Fackson Shamenda (GRZ)

All of this must disappoint Vice President Guy Scott who recently noted that the Patriotic Front will lose power in 2016 if it does not solve the unemployment problems. Separately Alexander Chikwanda is targeting a million jobs before then. But with no clear national development plan (the MMD's sixth national development plan appears to have been abandoned) that puts jobs at the heart of development, there's no clear path to achieving 100,000 jobs let alone a million! 

What should Government be doing to reduce unemployment?

Society, entitlement and preferences

A recent paper explores the influence of society on individual preferences. Standard economic literature more or less takes preferences as given (exogenous), new evidence however is poking some important holes in this area :

The recent work in psychology and economics has implications that are only beginning to be explored for the examination of the question how different aspects of society affect preferences, but which promise to undermine long-held standard assumptions in economics. If historical institutions shape preferences, which shape the choice of public policies and their effects, then societies almost surely have different optimal paths of development. If individuals understood these processes, they could design policies to nurture desirable preferences and in turn shape the paths of economic change. At a minimum, these findings should give pause to those who accept WTAs, WTPs, and market prices as stalwart guides to welfare.

The issue has many important policy implications, but two come immediately to mind in our Zambian context. The first is that it reinforces the need to look at our cultural context positively. Culture is usually seen as a constraint to "development". But this appears to again emphasise that a more positive approach to it could lead to much more harmonious outcomes. For example, we have previously noted the need for greater attention to be paid to "local ideas" in generating policies, rather looking to import "western models" alien to our land. The current constitution draft is an example of a foreign important with many non-Zambian ideas.