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Friday, 14 January 2011

Zambia As A Fast Growing Economy (Guest Blog)

Economic growth and development has traditionally been subject of economics since Adam Smith and it is still focused by theoretical, methodological practical experts as well. Despite our increasing knowledge, the international community emphasise and point to the importance of research into this field. The relation between the economic growth and the development of a nation is excessively debated among the economists and the international development agencies. In the case of Zambia it has even become a political football with a number of opposition politicians refusing to accept the fact that Zambia's economy has experienced strong growth in recent years, with real GDP growth in 2005-08 about 6% per year. This performance has been lauded by many independent international observers and Zambia has been dubbed by the Economist magazine as ‘the lion kings’ putting Zambia alongside the Asian tigers.

In fact according to the forecasts of the IMF, published in the latest issue of the Economist, Zambia will be amongst the top ten fastest growing economies in the world in the period 2011 to 2015. Please see table below:



Every Zambian should be proud of this achievement as it is a testimony of our resolve as a nation to reform our economy and provide an enabling environment for growth. Zambia has been pursuing economic reform policies under the IMF and World Bank supported structural adjustment programmes since 1991 under the MMD Government. As with most structural adjustment programmes, the Zambian model is premised on a simple neo-classical model that views free markets as the key to economic growth. The assumption behind this model is that liberalization allows markets to set the right price, hence promoting efficiency and increasing income, in turn leading to economic growth.

Economics is notorious for its divergent schools of thought, academic in-fights, stubborn fads and fanciful fashions. Development economics is no exception. Take the battle lines drawn between the protagonists of economic growth on the one hand and explicit poverty reduction on the other. In the last decade, the former group insisted that growth in itself would eventually lead to rising incomes, including among the poor. Not so, said the latter side, and emphasised the pattern of growth instead. For Harvard economist Dani Rodrik, writing in 2000, the discussion raging in workshops and research papers was little more than a “hollow debate” which distracted attention from serious questions about what actually works in development and how.

While economic growth is considered essential for poverty reduction, it is also recognized that growth may not automatically trickle down to the poor. Accordingly, it is essential that the new emphasis on poverty alleviation be founded on a careful and frank independent assessment of the effects of macroeconomic and structural adjustment policies on growth, distribution and poverty. Such an examination is all the more necessary in view of the fact that Zambia has seen the one of the most intense and recurrent application of structural adjustment programmes over the past two decades without making much progress in either poverty alleviation or development.

Thus, the key now for the Government in Zambia is to follow an approach that emphasizes policies that facilitate the access of the poor to human, physical and financial assets to improve their earning capacity over the next five year period. In this respect particular attention should be paid to public provision of education and health services and the implementation of the Fifth national development plan must be intensified particularly in the rural areas. While macroeconomic stability and structural reforms will continue to be considered to hold the key to sustained and rapid growth, it is also recognized that stabilization and structural adjustment policies may exert a temporary adverse impact on the poor.

Thus, it is advocated that such policies should be accompanied by safety nets and targeted spending programmes to mitigate their possible adverse consequences for poverty. The Government of Zambia is already implementing aspects of these policies through the Ministry of Community Development through the Zambia Social Protection Programme. Consequently, the recommended approach emphasizes improvements in the allocation of resources both over the short- and long-term to areas which can have a direct impact on the well-being of the poor. However, any such reallocation can only be sustained under conditions of rapid economic growth. While it is generally agreed that poverty reduction strategies cannot succeed if they are not accompanied by policies to sustain rapid growth and improve income distribution, it is precisely the content and nature of those policies that are at the heart of the debate.

Little wonder development authorities have become anxious. So has the tax-paying public: enough of the debate, they say, tell us what must be done for aid to work and poverty to fall! Is the hollow debate finally over and are those stovepipes finally coming down? It may be too early to call. For now, the pendulum seems to have swung to a more pragmatic centre. Private sector development, infrastructure and agriculture are high on the development agenda, while the role social policies play in growth, particularly in reducing poverty reduction and improving human capital, can no longer be overlooked. The policies that promote growth are probably not that different from those that target the poor directly, for the reasons just discussed.

These policies are likely to vary considerably depending on institutional context, making it difficult to generalize. The debate on growth versus poverty reduction is a meaningless debate for our nation that diverts attention from the questions that should be our real focus: what works, how, and under what circumstances? The MMD Government has every right to claim the current success as they are the architects of the reform programme which has been ably supported by donor agencies and so President Rupiah Banda is well within his rights to campaign on the record of the MMD for the past 20 years and he should not allow himself to be distracted by half baked arguments from the opposition who have failed to articulate an alternative economic policy vision for Zambia except to downplay the success of the economy.

Trevor Simumba 
The guest author is an international trade economist currently based in the United Kingdom

(The Zambian Economist encourages guest contributions from leading Zambian thinkers on matters relevant to national development. The purpose of these notes is to stimulate discussion and ensure logic and impartial critique plays a leading role in shaping public debate. See the guest authors page for more information).

29 comments:

  1. This research is "interesting" at least. To say that "Every Zambian should be proud of this achievement as it is a testimony of our resolve as a nation to reform our economy and provide an enabling environment for growth" is taking it a little bit too far. After all, Congo is listed higher than Zambia? I don't know if this is DRC or Congo, but either way, it says very little about a nations "resolve to reform". If GDP leaves room for boasting, Zambia's position amongst Zimbabwe (inflation number so high that it makes my eyes cross) and DRC (basically a failed state), as the only three countries since 1970 who have a lower score on the HDI should be enough to humble anyone.

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  2. Duckets could you please provide the figures you claim about HDI. Secondly the Congo refers to DRC. Thirdly, the list is based on GDP growth rates. Economic growth is defined as an increase in an economy's ability to produce goods and services. Think of an economy as a giant cake. We all have a slice of the cake to eat, and may be happy with the size of our slice or not. If the economy grows, we would be able to see the overall size of the cake increasing. So the bigger the cake the bigger piece each Zambian will have and if more zambians are working and earning money then the better our HDI will be. Even China with its 10% growth over the years still has a long way to go in terms of reducing poverty but when a country is growing then you have a chance to deal with poverty. So I really dont understand why we cannot accept the fact that Zambia is growing in terms of GDP and that we are receiving substantial FDI. Rather than polticise everything as Zambian Economists we should be putting forward solid ideas for the advancement of our nation. All Zambian should be proud because I remember in the 90's we were asked to sacrifice and in fact public servants agreed to take paycuts in order for zambia to fulfill HIPC conditions. Lets debate solutions and not just make negative statements

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  3. Whether or not our individual slice grows depends on whether we are able to share in the growing economy. Even if we do not benefit directly, we should still be able to see some advantages to the growing economy. This is because the extra economic growth should produce higher tax revenues, which can then be spent on public services that should benefit everyone.

    An increase in an economy's ability to produce goods and services, therefore increasing economic output, is possible under two conditions:

    1.More resources are used in the economy.
    2.Existing resources are used more efficiently.

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  4. Trevor, the size of the cake only matters if I get invited to the party. Regarding the HDI, I am referring to the 2010 Human Development Report issued by the UNDP. Page 3 gives the first reference to the trio of countries who have bucked the trend, and actually score lower in terms of HD than they did in 1970. I entirely agree with you 90% of what you are arguing, and I think the MMD is right to advance the gains made in this regard. And regarding one's ability to "accept" that Zambia has grown in terms of GDP...I COMPLETELY accept that...it IS a fact. I have no argument there. My primary critique of your initial post was that Zambia's growth in terms of GDP is not necessarily correlated to "our resolve as a nation to reform our economy".

    I also agree with you that the critiques...mine included, need to be more generative if they are to be helpful in these matters. Thanks much

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  5. Human Development Index: Trends 1980 - present
    http://hdrstats.undp.org/en/countries/profiles/ZMB.html

    Thanks Duckets, well noted. Please take a look at the chart on this link above. it actually shows that Zambia's ranking on the index has been growing from 2000 onwards and is close in line with Sub-Saharan Africa's rate of improvement. the statement on the nations resolve is not to say the growth is a direct result of that. the resolve issue stems from the point that in 1991 as a country we elected MMd overwhelmingly on the platform of deep reform of the country's economy and after much sacrifice of all zambians we are beginning to see the fruits of that resolve beginning to bear. Please recall the manifestos of MMD since 1991, the one thing they have been consistent about is 'economic liberalisation'. Agreed we can debate some of the specific policies but fundamentally the MMD has maintained, liberlised forex markets, non-expropriation of foreign investment, regulated land tenure system, central bank independence to supervise financial sector, liberal investment regime and an open regulated private sector led economy. i think this commendable looking at how some of our neighbours have performed. Note that South Africa is not even on the list of 'Lion Kings'

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  6. This is a fascinating exchange.

    Is there an issue about starting points here?

    Duckets is referencing the 1970s relative to now.
    TS is referencing 2000 relative to now.

    You may both be right!

    But I guess you need to agree on the time period!

    The general point I would make is that countries with spare capacity (usually recovering from war or severe adjustment programs) grow fast initially. Mozambique, Angola and DRC's growth rates are expected because they started from a low base.

    But a closer study the three reveals different ways in which they are growing. I believe Angola has the better model - it is infrastructure led and controlled FDI policy.

    The question for us then is - have we got the growth model right? We are growing, but are feeding on the right food and have the right health? That I believe is what you both seeking to answer, I think!

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  7. Comrade Simumba:

    Your conclusion should have been reserved for the year 2015. The projections made by The Economist for 2011 through 2015 are made on the basis of information being supplied by the Ministry of Finance (Central Statistical Office) and could, therefore, be a mere political tool used by the MMD government in readiness for the forthcoming tripartite elections. Let us not count our chickens before they are hatched, so to speak.

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  8. Kyambalesa,

    I think the forecast though is within the boundary of normality. GDP most likely exceeded 7% in 2010 - we have to see final figures. So I don't think 6.9% average over 5 years is beyond reach.

    It is not too difficult to achieve these growth figures where your tax very little on your key asset. What we need to ask is how much does copper contribute to this GDP growth? The answer is well known to regular readers of this blog. Very little or to be precise 7%. So we have an economy that will grow at 6.9% but its main asset is not part of this growth and also it gets less than 2% revenue from it. So these are fundamental questions.

    I believe if we get the model right, we can push copper's contribution to GDP growth to 20% and its revenue contribution around the same.

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  9. Zambian Economist,
    The calculation of Zambia's GDP keeps me up at night. I have always wanted to know who collects and how data is collected to provide credible information for Zambia's economic analysis. In simpler terms, and I guess my question should be, what elements are included in the computation of Zambia's GDP? What method is being used to calculate growth? Are the people conducting the calculation getting information from consistently reliable sources and are they consistent themselves? It is only when we understand these basics would we really come to a reasonable conclusion that Zambia's rGDP is indeed real or we are just getting excited about the luster of a mirage.

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  10. Mwata Chisha:

    Thanks, you have stated the issue more eloquently than I did.

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  11. Mwata,

    That's a lot of questions!
    We could be here the whole day!

    But here is what I know :

    - There are basic international standards on how GDP is calculation both in terms of economic text book definitions but also in terms of detail. These are well known to national statistical bodies. Your question really is about statistical independence which is a perfect valid one. I know that they know how to calculate GDP but I can't tell you that they are independent in doing so.

    - However, their figures are "quality assured" by the IMF because it uses them for it's own projections AND the IMF / World Bank have statistical development as part of it's support programme. If you read any of the documents we make available via IMF/Zambia Watch, you will that is the case.

    So I am reasonably confident these numbers are real and the sectoral break down makes sense as set out under another recent post. But I do think you have a valid point on having greater statistical independence like in advanced nations. Unfortunately your points have rarely been raised in the public domain!

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    Replies
    1. does the zambian football have an impact on the economy??

      Delete
  12. The problem with GDP is that it simply registers all economic activity that happens within a country, no matter how deleterious that activity is to wealth, the economy of the country, or who benefits from it.

    So if bank robbery was legal, people could set up a company called Bank Robbers Ltd., or RobbersRUs LLC, and their bank robberies would be counted as part of GDP.

    The biggest fraud in measuring the Zambian economy in GDP, is that the $2.5 billion that the mining companies take out of the country count as GDP.

    Not only that, but if the Zambian government would ever get around to cleaning up their pollution, that would count as GDP too.

    The old pre-1991 measure of economic activity was GNP, which is the measure of economic activity by Zambian nationals (at home and abroad), instead of the measure of all individuals in Zambia irrespective of their nationality.

    Which makes a big difference, considering that what was ZCCM is now foreign owned.

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  13. Trevor S,

    Agreed we can debate some of the specific policies but fundamentally the MMD has maintained, liberlised forex markets, non-expropriation of foreign investment, regulated land tenure system, central bank independence to supervise financial sector, liberal investment regime and an open regulated private sector led economy. i think this commendable looking at how some of our neighbours have performed.

    It has led to the exportation of at least $10 billion in mining profits from the Zambian economy.

    It has not led to a reduction in poverty levels. In fact if you look at the recent troubles in Western Province, it has left the country ripe for civil unrest because of the high poverty levels. The finance minister recently stated that there will be no significant change in pover for another 30 years, under the current free trade regime.

    If you look at Zimbabwe, you will see a country that has been heavily retaliated against, for democratizing it's economy. I guess Zambia avoided that, but the cost has been very high.

    The propaganda is that Zimbabwe's economy took a hit because of 'democracy' and 'rule of law', but the truth is that Zimbabwe has been under sanctions for a decade, through ZDERA (economic sanctions the former US ambassador to Zimbabwe called 'non-personal sanctions').

    An article that dispels most of the mythology (propaganda) against Zimbabwe and it's land reform program, a study of the effects of land reform in Masvingo Province:

    A new start for Zimbabwe? by Ian Scoones

    And one anecdotal story:

    (HERALD) ‘If you don’t pay, you won’t win’

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  14. grateful for all the comments. one thing I would say is that until we have a new measure of economic growth Zambia and all the countries use the standard measure of economic growth. i think the point you have all missed is how do we use this growth to now deal with the issues of under-development because the angola model mentioned for example has done a very poor job when it comes to HDI as the growth has up till now not yet trickled down and beyond luanda and the provinces along the coast inland angola is still severely under-developed. I am surprised that debate seems to just focus on arguing whether the economy has been growing forgeting that since 2005 Zambia has posted an average growth rate of 6% in real GDP which accounts for inflation. So the fact remains Zambia is growing but how do we redistribute this wealth and how do we mobilise more domestic resources and get more jobs for our people and better schools and hospitals. The fact is without growth you will have no economic development and without creating wealth you cannot alleviate poverty. As Economists lets provide solutions rather than argue about GDP. Even just a cursory look around Zambia you will see that while poverty is still an issue there is evident growth in the economy across all sectors

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  15. Mr K lets not be romantic about Zimbabwe. I have been working in zimbabwe on economic issues for sometime and that economy is not what it used to be. Teachers and all medical staff are still being paid by the UK and Australia through the UN system. I have read scoones report and its a typical romantic view not backed by reality. 50% of the farms taken over have been leased back to the white farmers by most of mugabe's peoiple including his wife grace. i cant say more but suffice to say mugabe has destroyed a great country and economy and you will be shocked to see how many of these zanu pf guys work with the same whites and british people they claim to despise

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  16. anon said...

    Mr K lets not be romantic about Zimbabwe.

    Actually, I am being realistic about Zimbabwe, because I have actually followed what happened to that country, beyond the propagandistic sloganeering that has been passing for news in the last 10 years.

    I have been working in zimbabwe on economic issues for sometime and that economy is not what it used to be. Teachers and all medical staff are still being paid by the UK and Australia through the UN system.

    So what is your opinion about the economic sanctions against Zimbabwe again?

    I have read scoones report and its a typical romantic view not backed by reality.

    Actually, his is the only broadbased survey of the impact of landreform in Masvingo Province, or Zimbabwe.

    So unless you have a better survey...

    50% of the farms taken over have been leased back to the white farmers by most of mugabe's peoiple including his wife grace.

    And your source for that statement is? How can you as a casual observer state that '50% of the farms' have been given back to anyone? Have you traveled the entire country?

    Again, what is the proof for your statement?

    i cant say more but suffice to say mugabe has destroyed a great country and economy and you will be shocked to see how many of these zanu pf guys work with the same whites and british people they claim to despise

    Again, what is your source for that statement?

    You see, I am going with the best evidence available, specifically so I don't have to depend on anyone's assertions. In short, why would I believe what you have to say? Other than saying that his view is 'romantic', do you have any proof that his survey is wrong?

    If you have better data, please present it to me.

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  17. Anon,

    If what you say is true and '50% of the farms taken over have been leased back to the white farmers', how do you explain the following:

    Less than 400 white farmers still own land in the country, down from nearly 5,000 a decade ago when Mugabe’s government started seizing the land in a bid to redress imbalances created by a century of colonialism.

    If as they say there were 5,000 white farmers (other data says 6,000), if 50% of the farms seized have been 'leased back' to the former white farmers, that would mean that 2,300 white farmers have returned to Zimbabwe. ([5,000 - 400]/2 = 2300)

    So why are the writers of this article not aware of this massive return?

    Like I said, you need to actually prove what you claim.

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  18. Underlying your assertion of course, is the idea that 'Africans can't farm', but that is the old racist colonial lie. The truth is that Africans are superior farmers, always have been. They can farm on the run ('slash and burn'), and they can farm in the desert (as in the forest islands if Kissidougou). And, they have numbers on their side, which is why in Zambia, African maize output was actively suppressed by underpaying farmers during colonialism.

    That is why it took the conscious act of destroying the Zimbabwean currency through ZDERA to even slow them down.

    You also call pre-land reform Zimbabwe:

    a great country and economy

    It was not a great economy for the African people of Zimbabwe. I would say that it is your recollection of Zimbabwe as a 'great country and economy', that is if not romantic, certainly blinkered.

    In fact, another anecdotal account contradicts your own:

    ‘If you don’t pay, you won’t win’
    By Isdore Guvamombe
    Sunday, 09 January 2011 19:12

    I quote:

    For 26 years, Gwaze worked for white commercial farmer Michael Mcgrath at Syalima Farm. All he got was a motorbike, yet in contrast, in the 10 years of the land reform he is a proud owner of a fleet of six tractors, nine vehicles, four motorbikes, 60 cattle and 70 pigs, among other things.

    “The greatest thing to ever happen to my life, is the land reform programme. I worked for 26 years for nothing for that white man at Siyalima Farm. He promised me a lot of things that he never delivered and at the end of 26 years, all I had was a motorbike, yet he had everything.

    “The way I am farming here is my personal way of thanking President Mugabe for giving me land. I was abused by the white man and we should not regret the land reform,’’ quips Gwaze, who employs 116 permanent workers and often engages contract workers. He also employs a manager and four foremen of all them with either motorbike or car for use.

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  19. Trevor, Cho, Mr K and co, sorry for coming to the party late!
    Yes Zambia has finally got a positive growth going and one should not belittle the MMD’s commitment to a free market even though other fundamental reforms like justice, equality, freedom of expression and accountability fall well short of our 1991 commitments and even modest expectations. Frankly though, it would hard to imagine how Zambia would fail to achieve reasonable growth under such favourable metal prices combined with continued budgetary support from the plethora of donors. It seems that once a society adopts the free market, the results are inevitable as can be seen by playing this video http://bit.ly/bRbxaj from gapminder.org. (tick Zambia in the right hand box).
    In fact the question everyone is asking is why Africa has taken so long to arrive at high growth. Firstly the locust-like high consumer economies were focused elsewhere, mainly South America and Asia, and global investors have only just begun to take Africa seriously as a supplier of raw material. The second major factor for the delay is cultural resistance which I will come back to later.
    I’m not an economist but investment is surely largely responsible for Trevor’s growth figures. As we know the extractive industry is generally fickle and faceless and cares little about governance, human rights, environment and cultural sensitivity as long as there is a quick buck to make for relatively low capital investment and risk. Is this the kind of investment that will help Zambians get rich? Not unless the workforce is prepared with the appropriate skills and government taxes and regulates these business and judiciously investing into productive renewable sectors. The opportunity doesn’t last forever: Zambia has sold about a quarter of its finite sub-soil resources already and damaged much of its natural capital in the process (soil, forest, fish and wildlife) but has precious little social investment to show for it. We are still consuming the assets; I believe economists refer to it as asset stripping. To a layman it’s like a farmer eating his hens instead of feeding them and sharing the eggs. We have also largely squandered the international community’s good will and the marshal plan for Africa is quickly turning into humanitarian support which helps no-one in the long run.

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  20. Trevor, Cho, Mr K and co, sorry for coming to the party late!
    Yes Zambia has finally got a positive growth going and one should not belittle the MMD’s commitment to a free market even though other fundamental reforms like justice, equality, freedom of expression and accountability fall well short of our 1991 commitments and even modest expectations. Frankly though, it would hard to imagine how Zambia would fail to achieve reasonable growth under such favourable metal prices combined with continued budgetary support from the plethora of donors. It seems that once a society adopts the free market, the results are inevitable as can be seen by playing this video http://bit.ly/bRbxaj from gapminder.org. (tick Zambia in the right hand box).
    In fact the question everyone is asking is why Africa has taken so long to arrive at high growth. Firstly the locust-like high consumer economies were focused elsewhere, mainly South America and Asia, and global investors have only just begun to take Africa seriously as a supplier of raw material. The second major factor for the delay is cultural resistance which I will come back to later.
    I’m not an economist but investment is surely largely responsible for Trevor’s growth figures. As we know the extractive industry is generally fickle and faceless and cares little about governance, human rights, environment and cultural sensitivity as long as there is a quick buck to make for relatively low capital investment and risk. Is this the kind of investment that will help Zambians get rich? Not unless the workforce is prepared with the appropriate skills and government taxes and regulates these business and judiciously investing into productive renewable sectors. The opportunity doesn’t last forever: Zambia has sold about a quarter of its finite sub-soil resources already and damaged much of its natural capital in the process (soil, forest, fish and wildlife) but has precious little social investment to show for it. We are still consuming the assets; I believe economists refer to it as asset stripping. To a layman it’s like a farmer eating his hens instead of feeding them and sharing the eggs. We have also squandered the international community’s good will and the marshal plan for Africa is quickly turning into humanitarian support which helps no-one....cont

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  21. Regaining indigenous control of the economy was always going to require a high degree of mutual trust and partnership between government and the people in Zambia’s post colonial condition. This covenant was damaged when communal ownership and management of land and natural resources, the indigenous economy, were centralised in the 70’s and despite overwhelming evidence from around the world that local authorities provide the best stewardship, the classic tragedy of the commons continues unabated. Instead of correcting the problem the economic disenfranchisement continues unabated with corrupt chiefs joining the sale of public assets. Fortunately the majority are resisting the temptation of quick money and many are making their own arrangements to regain at least formal custodianship in the form of trusts. With neither land tenure system providing adequate security of ownership it is no wonder average yields of maize have plummeted to less than a tonne/ hectare.
    Preparing for the looming challenges like peak phosphorous, peak oil, climate change (which in Zambia’s case will almost certainly be drier) is way overdue and must begin with the ownership issue. To capitalise on the lucrative and mutually beneficial opportunity to provide eco-services to the world, Zambia will have to undergo a paradigm shift from being the second fastest deforesting society on earth to becoming a key carbon soak. The current government has overseen wholesale plunder of fish and wildlife stock, sat idle while some 70% of the national livestock herd has been decimated by disease (and continues) and ignored the pollution and degradation of the all important Kafue basin. Estimates are that Zambia loses at least the global average approximately 4 tonnes of soil per capita to erosion every year and increased fire on the ever drier and brittling habitat (probably due to decline in large mammals) is depleting organic carbon and moisture critical for plant growth and soil stability, the life support system. Ultimately, the wealth and health of our people depends on learning to manage our environment sustainably, a fact fatally ignored by many great civilisations to date.

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  22. Let me now come back to the cultural resistance I mentioned earlier. Indigenous culture is inherently incompatible with the values that drive modern economies. Societies that put community first, share common resources and promote modest consumption do not fit with “greed is good” “I want it now” and “its all about me” memes that now drive the global economy. This dilemma is a huge problem often swept under the carpet but most Zambians I know resist making this cultural leap until they become desperate. It means abandoning the fundamental values that underwrite the oldest sustainable survival strategy on earth. The state structure and legal system do not accommodate both cultures ultimately forcing people to choose. I have interviewed hundreds of charcoal burners who hate what they do to the depth of their souls but have no more options. Most rural people resort to urbanisation because it frees them of their cultural responsibilities to the environment and the community. I would argue that the growth Zambia is experiencing is in a large part due to the resistance to plunder finally breaking down as it has in western societies.
    Is abandoning traditional culture the best survival strategy? Perhaps in the short term but the scientific consensus is that nature will punish us severely if we do not infuse the wise lessons learnt through history into our economies. With a more open debate, perhaps Zambia can find a reasonable compromise between science and greed and lead the world forward into a culture of sustainability!
    By the way Trevor, where would MMD be without the sacrifice of the unpaid opposition who keep steering it back on track- it’s no coincidence that the majority of critics are founding members who clearly believe in the principles more than the power. If not for them we’d certainly have had Mr Chiluba for a third term, maybe forever!

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  23. I see you guys have been having an interesting debate. Since a lot has already been said, let me just pick a few important points. First, I think there is a general agreement, at least amongst economists, concerning the methodology to compute the economic growth. Depending on the quality of data a country has, that may explain the possible variances. Thus, the 6.9% growth for Zambia is probably undisputable.

    What is interesting is the explanation for this growth. Trevor S gives credit – almost entirely to MMD’s policies. Yes, that may be a partial explanation. But unless we factor in the thirsty for resources in China, India and other Asian Tigers – which in turn boosted the commodity prices such as copper, we might be giving too much credit to MMD policies. Exogenous factors played a bigger part. If for some reason (e.g. a new metal makes copper obsolete) or the demand for raw material in those Asian countries were to plummet, Zambia’s growth would melt away. True or false? Bearing this thinking in our mind, that would give credence to Rolfshenton point – that we may boast of short-term growth, but we at the same time have become bad custodians of our natural resources. Shenton goes on to make another point that – this measure of growth must be calculated against its by-products, such as the environmental degradation and pollution say, mining activities can and do cause. Shenton only oversteps when he wants countries like Zambia to think small (or unmodern) when we develop. Zambia needs huge and not minuscule capital investments.

    Coming back to Trevor S., while lauding ZED’s economic growth, the trickle-down impact he so much counts on, does not take place in Angola nor Zambia. The size of pie he is talking about is actually shrinking for the majority of Zambians. To have few billionaires and thousands of paupers is not the situation I would opt for. Don’t look at those few SUVs driving on those pot-holes as something to celebrate about. Unless this growth can be accompanied by reasonable distribution policies, we have a long way to go. What counts is what goes into ordinary Zambians’ pockets. As I understand it – this is the major failure of MMD government. Whether opposition can do better or articulate this weakness well to the people, is the main question. A sound political discourse should happen around this issue – poverty reduction. Growth per se is nothing. But what you do with it. Nigeria has been growing ever since I can remember, but it still remains a poor country. [....cont]

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  24. MrK also makes some important points. He is rightly concerned that – even if everyone is interested in wealth creation that MUST be done by Zambians. His fears are that – otherwise the so created wealth would be drained out. Indeed, Trevor cannot dispute that billions of dollars are currently being siphoned out [you’ll retort that an investment must earn a return]. More so, this hemorrhage is worse because government has refused to implement windfall tax. Since these days money knows no boundaries – unless you ensured that the economy is in the hands of Zambians, it is given, that there will be assets lost. Therefore, MrK does not see why we should brag about an economic growth which is not generated by us (foreign investors are the main players). This point about “open economic model” ties in again with Rolfshenton’s blind-development argument – whereby you consume as if there was no tomorrow.

    Last but not least, it is sad that in Zambia we tend to spend lots of time on minor issues leaving bigger ones unattended. Take Chiluba’s 3rd Term attempt for example – while FTJ under calculated on 3rd Term, but he did other good things. I am happy that without mentioning Chiluba by name, Trevor S. has indeed recognized Chiluba’s contribution. Hopefully my views will contribute something to this debate. Cheers!

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  25. "Think of an economy as a giant cake. We all have a slice of the cake to eat, and may be happy with the size of our slice or not."

    Trevor, I feel that you do us a disservice with this example. "projected economic growth" as I said in an earlier post, means next to nothing in a country with a high gini coefficient. The fact of the matter is that in Zambia the pockets of politicians get bigger with each percentage increase in GDP. Inequality breeds insecurity and civil unrest which is what a lot of African countries are grappling with.

    How can we say we have any growth when the interest rates for a basic loan can get up to 100%?? How is this supposed to encourage any budding entrepreneur in zambia to create jobs in the economy? When vast majority of our products and businesses are south african/ foreign owned how is the "economic growth" attributed to zambians? With an average life expectancy of 38 can we really pat ourselves on the back?

    China as much as it has acheived economic growth, has sacrificed the voice of its people a long the way. With practically non-existent labor laws, patent laws copyright laws, and a middle class that is just now beginning to feel the trickle of that "economic growth" are a good example of what numbers and statistics really are...a farce.

    I would like to challenge us all to stop trying to justify statistics which can be obliterated by a statistics 101 student with one swift argument and face the reality that this economic growth is fictitious and does nothing to help the common man which I believe is what we're arguing for.

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  26. We could have astronomical growth and all wealth accumulated with the top two percent of the population. Wealth gaps create social problems and resentment; so it would seem that the issue is distribution of wealth and not growth. If we are growing but concentrating wealth (as is happening) what good does it do to be in the top ten?
    In addition, what is our growth based on? High metal prices for our copper; in the meantime industrial output and agriculture aren't rising fast at all and it is those that will provide stable jobs and income and goods and services. The Economist is right to point out that programmes and policies that will assist the people will be key; and while he is right to point out that the MMD government has led to this growth the fact is that the MMD and its government has not enabled the equitable distribution of the wealth generated or facilitated the effective functioning of the programmes so badly needed. More of our newly earned wealth seems to be going to conference facilities, and dare I say it, airlines.

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  27. Former WB Chief Economist Joseph Stiglitz - GDP Numbers Aren't Even A Good Economic Measure

    Joseph Stiglitz talks about going beyond GDP

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  28. interesting research topic! i want to learn something before i get to comment; do you think the interpretation of the GDP computation is realistic? i ask this because apparently in Zambia the levels of unemployment outweighs that of the employed. you and i do know that GDP is measured out of taxed 'businesses' (for lack of better term to use),kindly explain to me how you arrive at the conclusion that our economy is growing when we have a larger number of our poopulation languishing in poverty. i dont mean to differ with you but to get clarification of the situation in relation to the GDP interpretation of today. the mesage sent across the world is that poverty is reducing sice our GDP is increasing but realistically the poor are getting more and more poorer and we all know that the poor people usually have bigger families than the well to do i.e the population of the poor expands even more. how possible is it that we can rate our country to be economically growing when such a situation is prevailing? or maybe there isnt a link between growth and poverty reduction? after independence, Zambia recorded some level of development worth remembering but due to the need to eliminate the difference between the rich and the poor we saw our country economy declining drastically, from the happening i see a re-enforncing link between the two concepts. how possible is it that we can archieve one without the other?

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