Zambia Overview CONTEXTSTRATEGYRESULTS Zambia has had a long period of political stability. With strong growth in the last decade the country has reached lower middle income status. Investor confidence has been high as evidenced in the successful issue of two Euro bonds. Independent since 1964, Zambia has experienced five successful multiparty elections since the return to multiparty politics in 1991. The latest elections in September 2011, were peaceful, and further strengthened Zambia’s democratic credentials. Zambia has British–style parliamentary democracy. Government consists of the President and the 158-seat national assembly. Elections are held every five years and the presidency is limited to two, five year terms. There are also traditional chiefs and their headmen, who still command a great deal of respect but hold little decision-making power except when it comes to land distribution. Zambia has had a decade of rapid economic growth. A combination of prudent macroeconomic management, market liberalization policies, and steep increase in copper prices helped drive investments in the copper industry and related infrastructure to achieve an average annual growth of about 6.4% during the last decade. Though the economy is dependent on copper, the agriculture sector is the major employer (70% of the population). However, the sector’s potential to contribute to the country’s development remains largely underexploited. The recent rebasing of the national accounts has given a new perspective to the structure of the economy. The Central Statistical Office of Zambia has just finalized the rebasing of the national accounts to 2010 (from 1994). Preliminary estimates put the economy at 25% larger than in the old accounts. Mining, construction and trade gained more prominence as agriculture declined. However, Zambia’s economic growth has not translated into significant poverty reduction. Sixty percent of the population lives below the poverty line and 42% are considered to be in extreme poverty. Moreover, the absolute number of poor has increased from about six million in 1991 to 7.9 million in 2010, primarily due to population growth. The urban picture is far better than the rural: in the Copperbelt and Lusaka provinces, for example, poverty incidence is fairly low (22% and 34% respectively), whereas in the rest of the country, which is dominated by agriculture, poverty rates are greater than 70%. The country has defined its own development agenda through its Vision 2030 and the Sixth National Development Plan (SNDP) which has recently been revised. The Plan is organized around the theme of “broad based wealth and job creation through citizenry participation and technological advancement.” Specific development goals include promoting inclusive growth, fostering a competitive and outward-oriented economy, significantly reducing hunger and poverty, and reaching middle income status. Accelerating growth and reducing poverty will necessitate increasing the competitiveness of the Zambian economy by reducing the cost of doing business and ensuring that the rural economy, upon which much of the population depends for its livelihood, contributes meaningfully to overall growth. Despite vast potential and stated commitments to diversification, the mining sector continues to dominate the economy. The World Bank Well before attaining its independence, Zambia began to receive World Bank support in 1955. As of April 2014, International Development Agency’s (IDA) net commitments in Zambia totaled $712.2 million for eleven active projects (nine national for a total of $622.2 million and two regional for a total $90.0 million), supporting programs in agriculture, infrastructure, energy, the environment, and human development. Agriculture continues to be the largest area of support. The International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) are also providing support for Zambia’s development. The World Bank Group’s strategy for the four years (2013-2016) was approved by the Bank’s Board in March 2013. The strategy is aligned with the government’s development priorities. In a country that displays both low income and middle income characteristics, the strategy supports three objectives that speak to the dual nature of Zambia’s development challenges and opportunities: Reducing poverty and the vulnerability of the poor Improving competitiveness and infrastructure for growth and employment Improving governance and strengthening economic management. In transitioning the WBG from primarily a lending to a solutions institution, the Bank is giving equal importance to both funding and analytical work. Analytical and Advisory (AAA) work consists of reports, policy notes, non-lending technical assistance, conferences, workshops, country dialogue and other activities that generate knowledge through direct engagement with the client. It is through the AAA work that the Banks global knowledge and expertise is adapted to regional and local circumstances. The analytical work is designed to help Zambia improve its policy environment and accelerate its development efforts. Some of the significant work recently done in this area is the South to South dialogue in which the Bank facilitated a peer to peer learning experience between Zambia and Chile to better understand how mineral wealth can be transformed into government revenues and how the financial resources can help to promote human development and alleviate poverty. The Bank has also helped in the development of legislation on agricultural marketing, strengthening government capacity and reducing the cost of doing business in Zambia.
Posted on: Mon, 10 Nov 2014 01:07:11 +0000
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