Lusaka, Zambia, December 12, 2012—The World Bank announced today that Zambia’s economy is expected to grow by 7.3 percent in 2012, slightly higher than the 6.8 percent growth rate of 2011. The economy has seen robust growth during 2012 in construction, transport and communication services, manufacturing, and agriculture, even as mining is expected to contract slightly.
The new World Bank report titled “Zambia Economic Brief: Recent Economic Developments and the State of Basic Human Opportunities for Children” notes Zambia’s growth performance in 2012 will keep it in the company of fastest-growing countries in sub-Saharan Africa (SSA), including both mineral and non-mineral producing countries. In October, the Bank said approximately one third of SSA countries would exceed growth rates of 6% (excluding South Africa), but that the region as a whole, buoyed by new mineral exports, would grow by 4.8 percent in 2012.
“Medium-term economic prospects for Zambia remain good though dependent upon continued high mineral prices,” says Kundhavi Kadiresan, World Bank Country Director for Zambia. The World Bank estimates GDP growth is expected to average above 7 percent over the 2013-14 forecast horizon,” concludes Kadiresan.
Construction growth in the recent years has accelerated in response to demand coming from rising urban incomes and a marked pick up in investment in mining and roads, the Bank notes. In addition, rapid expansion in transport services in Zambia is also a response to strong growth in demand from other sectors of the economy. Telecommunication services continue to grow due to an expanding customer base.
The report notes that with high growth, government revenues have also grown, allowing the government to ramp up public investment in roads and energy which if implemented efficiently can propel the country’s growth further.
The World Bank Country Director, Kundhavi Kadiresan said that this is the first Economic Brief the World Bank is launching. Twice per year, the Bank will produce a series of short economic updates that are expected to support evidence-based policy debate in Zambia.
High Growth amidst High Poverty and Inequality
Despite strong economic growth in the last decade, Kadiresancautioned that there was very little progress in reducing poverty, particularly in the latter half of the previous decade. This was primarily because of two reasons.
“First, the growth – driven mainly by industries such as construction, mining, and transport and communication – did very little to create new jobs and expand economic opportunities beyond the small fraction of the country’s labor force already employed in these industries,” said Kadiresan. “Second, the urban-centered nature of the growth also failed to generate enough opportunities for roughly two-thirds of the Zambian population who live in rural areas, depend on agriculture and have seen incomes remain largely stagnant over the last decade,” concludes Kadiresan.
Moreover, the concentration of economic growth in particular sectors and regions manifests itself in the persistent high levels of inequality in Zambia. The Bank notes that policies that boost human capital of children and youth could promote growth and reduce inequality in the long run.
For its part, The Government of Zambia welcomes the World Bank’s first ever economic update for the country, noting the analysis can better help the current administration to focus on core issues hampering poverty reduction and inequality, now that the economy is stabilized and growing steadily.
“We welcome these reflections as they will provide an avenue for the country to tap into the Bank’s experience from its global reach and vast intellectual resources in dealing with some of the pertinent challenges that we face here in Zambia,” said Alexander Chikwanda, Zambia Minister of Finance and National Planning.
The report argues that pre-determined circumstances such as gender, ethnicity, birthplace, or family income should not determine the opportunities available to children to receive adequate education; a healthy start in the first few years of life; and safe, stable, and stimulating conditions for development.
“One of the primary findings of this report is that opportunities for children in Zambia in education, health and infrastructure services are mostly low,” says Praveen Kumar, World Bank Lead Economist for Zambia. “While school attendance has high coverage and does not depend much on circumstances, finishing primary school on time and quality of education depend strongly so. Opportunities for health and nutrition appear to be universally low in Zambia and have a high degree of inequality. Access to basic amenities such as drinking water and electricity is extremely low, and inequality extremely high,” concludes Kumar.
The report finds that some circumstances such as the wealth of households, location in terms of rural versus urban or the province of residence and education of the household head have significant effect on basic opportunities available to the children.
“The findings of the World Bank from their analysis of the thematic topic for this brief, “the basic human opportunities for children in Zambia”, have significant policy implications. The link being established between a child’s circumstances and access to basic services, and the likely conditions for that child in adult life is something we all need to deeply reflect upon,” concluded Minister Chikwanda at the December 10, 2012 launch of the Economic Brief in Lusaka.
The report develops an index, called Human Opportunity Index, to measure the level of opportunities available to children in Zambia.
"Over the past ten years, the technology for poverty reduction has changed dramatically. Countries now have the tools and the information to reach out and help the most disadvantaged amongst us,” says Marcelo Guigale, Director for Poverty Reduction & Economic Management, Africa Region, World Bank. “Few of those new tools are as promising and as powerful as the Human Opportunity Index. It is not surprising that leading developing countries like Zambia are considering adopting and adapting the Index in their social assistance strategies", concludes Mr. Giugale.
World Bank and Zambia
The World Bank has a current portfolio of over 503 million US Dollars in eight projects in Zambia covering agriculture, water, energy, roads and health sectors.The Bank also provides analytical and advisory services designed to help Zambia improve its policy environment and accelerate its development efforts.