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Tuesday, 5 July 2011

Economic Bumblers

A recent Parliamentary report on the government’s economic rationale for prioritising tourism among the various sectors:
Your Committee learnt [from a government response] that the prioritisation of the tourism sector was based on an economic rationale after recognising the considerable value addition and multiplier effects of the benefits that the sector contributed and/or could contribute to the national economy. These benefits include the direct ones arising from generation of jobs and creation of economic stimulus in rural areas while indirect ones include contribution to foreign exchange earnings and motivation of tourism industry forward and backward linkages. The choice also was premised on the immense prospects that subsist in the industry for wealth creation. These prospects exist on account of, among others, the rich biodiversity, abundant water bodies, spectacular waterfalls and landscapes, pristine ecosystems and rich culture.
This is what we call economic bumbling. Such language does not mean anything, but designed to fool the economic illiterate – which of course excludes any of our readers. So how do we make sense of the above?
Well for one thing theese parliamentarians and the government don’t know what term “economic rationale” means. The economic rationale sets out the underlying efficiency or equity failures that requires government to intervene in the sector in the manner it is doing. It is the raison d’etre based on fundamental distortion. What is it about tourism that means that it cannot get along fine on its own? What we have is just a list of undefined “value addition” and “multiplier effects of the benefits”. In other words, they don’t even what they are talking about.

Now without establishing the rationale, the government response purports to tell us what these “benefits” of tourism are. The main three allegedly being – “generation of jobs”; “foreign exchange earnings” and “creation of economic stimulus”. Are these benefits? Absolutely not! These are not actually benefits – rather they are intermediate means for potentially achieving some increase in welfare to ordinary Zambians in the future. They are means to an end, not ends or benefits in themselves.

Take the bizarre "benefit" of "foreign exchange earnings". This must surely be silly season. How is that a benefit to anyone? In what meaningful economic sense is it an end product to ordinary Zambians?

But surely jobs are a benefit right? Well, not the job itself, but the end product increased well could potentially be classed as such,  but even there it’s not quite as straightforward. I wont get into the complex discussion around "transfer payments", two other dimensions should be enough to highlight the intellectual poverty at play. These are additionality and quality. 

Additionality alerts us to whether the said jobs in tourism are genuinely additional to the national economy or simply diverted from elsewhere or indeed transitory. Many of the so called jobs being created in Zambia are just transfers from elsewhere. This is the phenomenon we have seen in mining especially, when expatriates come in or workers from urban areas move to western province and take jobs. This happens largely due to skills shortage which leads to the same workers moving to better jobs, or more common in Zambia we import workers while UNZA graduates languish without jobs or end-up not working an area they specialise in. But even when such jobs are additional, we too often find that they are temporary or at best seasonal (as is the case in tourism). 

Similarly, the quality dimension reminds us that it is not just any job creation that matters, but a high quality job. In Zambia may of these “tourism” jobs in lodges and other places are full of casualised workers; poor wages for long hours; absence of long term pension benefits ; and limited labour rights, if any. These in all likelihood what we call "dead end" jobs.  One will not find our parliamentarians thinking around these sorts of questions, rather they prefer to bumble at every turn. 


  1. In spite of Government's constant repetition that it prioritises tourism there are frequent increases in charges by Government organs (immigration, ZAWA, National Heritage, RATSA, Councils, etc)that are seriously hindering tourism. Our neighbors, as a result, are cheaper and more hassle free and are getting a bigger share of the tourists. This is seriously denting the Livingstone economy which had all its other industries destroyed years ago by cheap second hand imports.

  2. The real test of course was the WC2010!

    Which we failed to take advantage of!

    The tourism policy is not thought through. Last time I read govt was planning to give bank loans to would be domestic tourists!

  3. the hassles on some entering zambia need to be reduced. just coming in with you vehecle you can take as much a 1-2 hours to have it cleared. payment for your vehicle are too high and you have to be moving from office to office to get all the things done. doing everything under one roof and not having police stop you at every turn would be commendable. secondly we need less of gov and more of private sector in this industry.zambia remains largely unknown as a tourist destination

  4. In Zambia 'earning Forex' has, since the 1980s 'Forex shortage', been seen as a 'benefit'. Take for example the recent statements on the development of Lower Kafue and Itezhi Tezhi power stations. The Energy Minister, Mr Konga, Zesco Board Chairman Mr Lamaswala and Zesco MD Mr Mupwaya are all on record saying that once these two power projects come on stream in 2016, Zambia will have surplus electricity to export and earn the country 'Forex'!Lol! And this; in a country that only has 19% of its population connected to the electricity grid!


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