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Thursday, 11 April 2013

Mining and Employment

An interesting statement from Vice President Scott on the public pressure for mining jobs:
“Ideally, Vedanta wouldn’t really be worried about Zambian employment levels as it is not their issue…But we are pressurizing them to worry about exactly that. There is a concern that there is a disconnect between investment and employment…”
Isn't the real question whether the disconnect between mining investment and employment is real or imagined? Although mining generates significant revenue the transmission from growth in mining investment to jobs is not automatic because the sector is not labour-intensive. Relying on mining companies (even pressuring them) to create jobs is a wrong policy focus in my view.

Jobs have to come from employment intensive sectors like agriculture and construction  The question we should be asking is what policies are needed to ensure these sectors become big drivers?

In terms of construction. Not all construction is labour intensive. But one form of construction which will create jobs is housing : if Zambia's slums can be replaced by decent, low-cost homes it would create mass employment for young men. Housing is an asset that is relatively easy to collateralize: the homes for Britain's nineteenth century cities were financed by building societies.

A massive low cost housing driving can easily be funded by the banks and Government. Every Zambian can have a roof over their head by 2016. And unemployment would be massively reduced.

What we should ask from mining companies is simply taxes not jobs. Let us get the right money for our resources and use it to create employment. NAPSA has also been sitting on money which we should be using for this housing drive!

As far as agriculture is concerned we need to get the policy right by reviewing the role of the FRA. We should also encourage more export led diversification. That means we need to support a depreciation in the real exchange rate (the Kwacha needs to become weaker after accounting for relative price differences between Zambia and other countries).

Over the last decade the real exchange rate has appreciated leading to decline in agriculture's export competitiveness. Our politicians do not seem to understand the difference between real and nominal exchange rates. 

Question : How do we create more jobs in Zambia?

Copyright © Zambian Economist 2013


  1. Simple question Cho, how is it that the local economists resident in MOF aren't able to think and implement such ideas? They can't think at this level or is it the political master suppressing such thinking? An entire government without a single simple plan out of poverty, we are in trouble!


  2. The problem as I see it is not the economist at MOF, it's the politicians driving their own agendas that are a problem. That is not to say an economist can't be a politician but that the economist politician needs to be driven by the right princples,agendas and issues.If our continue to be driven by politics of the belly then this beloved country of ours is doomed!


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