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Saturday, 30 July 2011

What are Zambia's current challenges?

"Zambia’s key challenges resemble those of other Low Income Countries. Economic growth, although improved, has not reached the levels needed to attain the Millennium Development Goals (MDGs), nor adequately benefited the areas and sectors where the poor are most numerous. And despite weathering quite well the recent global financial crisis, Zambia can do more to reduce vulnerabilities to future shocks.....the authorities should give particular attention to four key challenges: (i) sustain the recently achieved low to moderate levels of inflation, (ii) reverse declines in capital spending and strengthen public infrastructure, (iii) mobilize domestic revenues, an area where Zambia has begun to lag comparator countries, and (iv) build on progress....to further develop the financial sector"
From the IMF latest assessment. The second point might raise eye brows (for non-regular readers of Zambia Economist) in light of the recent road projects by the Banda administration as the campaign period dawned. But actually, the general picture on infrastructure development is quite poor. We have chronicled this in the past, but this graphic from the same report drives the point - capital expenditure as a proportion of GDP has actually been falling, though the government has assumed a larger role. But obviously not enough to fill the void left by foreign funding!

Without significant infrastructure economic diversification will remain a challenge - see the monthly essay Five Questions on Zambia's DiversificationThere's also the problem of rural-urban infrastructure divide which we have also touched on - see The Rural-Urban Infrastructure Divide, 2nd Edition.

The question is what new policies are needed to close this gap? What new policies should a new government pursue?

As we are answering that question, its worth also noting that issue is not just spend more and more. As has been noted by many observers, the quality and delivery of investment is vital. Corruption and poor appraisal of infrastructure options undermines the little money we have. So is arbitrary spending of money that does not go through proper budgetary procedures and public consultation. In short we face two challenges - how do we ensure the little money we have is spent properly; and, how do we close the infrastructure spending gap both nationally and across regions?

1 comment:

  1. The truth is sometimes complicated but this one is not. It’s just that we have to make sense and the things that make more sense are the daily things we relate to. I don’t understand why we in Zambia are so relax about making money. I was trying to buy some gadget from a hardware shop in town but the shop attendant was exhibiting a very uncaring attitude bordering on being rude. It stouts me that I was the one spending money yet the guy who was receiving the mula was uncaring. Our enlightened friends go an extra mile to undress to receive the mula yet we are very casual in our selling of products and services. This is what prompts me to talk about the streets of Bangkok where nice cute sexy girls in miniskirts parade in the sidewalks asking passersby, “Sir would you mind taking a hot cup of tea in our elegant but competitive restaurant?” This is a gorilla marketing strategy exhibited by the girls.

    If we are to survive and make it, we need to change the way we do business. Nothing endures forever except CHANGE itself. Those that are left in the by-walks of life are those that have refused to adapt to change in this ever-changing hostile environment. The milieu is not smiling at us. It’s actually grinning always ready to chew us alive. Actually, the environment is also changing - devising more canning ways of masticating its victims.

    At least I have admiration for the hawkers (street venders and kaponyas) because they are aggressive in their marketing strategies. It’s unfortunate we are where we are now. I have always said Zambia is a land of plenty and the abundant natural resources cause people to be lazy. Where there is no need, there does not exist innovation. Moreover, this laziness culture inherent from pre-colonial days was exuberated by Kaunda’s socialist philosophy through unlimited economic handouts. This indeed was the unseen silent harm which Kaunda unknowingly did upon the Zambian population. I understand there was need to equitably distribute wealth in view of the fact that the asserts and capital were in the hands of a few white settlers. But I think he should have devised a mechanism of empowering the local people while maintaining the capitalistic nature of our economy in broad perspective.

    Fortunately, much as I hate the fact that FTJ’s era had institutionalized corruption, Chiluba, opened our eyes in terms of ownership of asserts. I think the corruption was inevitable because of red tape (bureaucracy) in setting up and running of business. Of cause, the MMD was rotten in this regard and they need to take the blame as well as the praise for the blessings and evils of liberization. I don’t want to appear to make excuses for our current failures. We have our beautiful but awful history to learn from and we stand to achieve more for we have the tools to change our future unlike our forerunners. Yes our ancestors and predecessors blundered on some key issues, but we can redeem ourselves with all this knowledge that we have.

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