One of the questions we get often relates to Zambia’s GDP. Recently someone asked : are the GDP growth figures a true reflection of Zambia’s economic performance?
The simple answer is no because GDP has several limitations for a country such as ours.
First, GDP measures the value of output produced in Zambia. But only that which is officially recorded. It does not capture our large informal sector (believed to be around 40% - 60% of gross national income), where the bulk of transactions are not recorded. So countries which record transactions better will have higher GDP than Zambia but that does not mean our true national output is smaller.
Secondly, GDP does not take into account negative externalities. So if you produce more copper and you cause sickness to people around Kankoyo, they say GDP has increased. But that is only because we are not producing the 'right amount' of copper in a safe and humane way. The true cost of producing copper is not being included.
Which leads to the third point. GDP does not measure quality of life. It does not tell us whether Zambians today are better in terms of “quality of living” than we were last year. It is a pure measure of income. Quality of life should not be confused with standard of living, a measure of income. Quality of life includes other things e.g. basic human rights, freedom, good mental well being, wealth in general, education, etc. Things that are seen as building blocks of “real development”
And of course it goes without saying, money cannot give you happiness. Especially if societies are highly unequal, like we have we in Zambia. The few control all the resources, mine our copper and keep shuffling national jobs among themselves. We are deeply unequal and as a result deeply unhappy.
A word of caution.
GDP growth may be a potentially useful statistic. It tells us that measured GDP has grown. But we need to be clear what the changes may be signaling. If GDP grows it is not necessarily the case that the economy has grown. It could simply be that more and more businesses are becoming formalised. In short our growth may be due to the fact that we are now better at recording and we have fewer black markets! In practice very little may have changed!