The Zambia African National Congress

POTENT DEVELOPMENTAL SECTORS

ECONOMY & TRADE  

The Industry Development Plan is a key input to One Zambia, One Nation, the country’s long-term social, economic and environmental vision that articulates where we want to be in 2020.

One Zambia, One Nation sets out goals and benchmarks aimed at creating a safer, fairer, more prosperous and environmentally sustainable state. As an input into One Zambia, One Nation, the Industry Development Plan provides the economic strategy to deliver a more prosperous Zambia.

The ZANC is committed to using the same partnership approach adopted to formulate One Zambia, One Nation as a means for the continual improvement of the Industry Development Plan. This partnership approach is evidenced by the consultative arrangement with stakeholders structured into the Industry Development Plan, specifically with Industry Councils and Partnership Agreements and through general consultation with the community.

The fundamental principle behind ZANC’s economic strategy is to increase demand for goods and services produced within the state economy. Increasing the demand for goods and services is not only important to major enterprises, but vitally important for small and medium sized businesses.

ZANC’s economic strategy is about increasing demand in all three areas. In an economic sense, the overall impact of the government’s economic strategy will be to create an increase in aggregate demand in the n economy. Businesses rely on a growth economy to survive and expand, and in turn employ more ns.

Having a competitive business environment relative to the rest of the region is critical to sustainable growth. The ZANC government will approach relative competitiveness in a systematic way that ensures Zambia remains highly competitive with other states.

Complementing this approach, our government will seek to secure significant, new investment by working closely with industry sectors to realise their growth potential. In particular, the government will focus on regional development by ensuring necessary infrastructure is in place for growth and investment to occur.

Our government’s Economic and Social Infrastructure Fund will provide the financial basis to ensure all the opportunities from the unprecedented level of infrastructure developments are realised and further new infrastructure and investment is secured.

The ZANC government’s strategic approach to increased demand involves:

A. Creating a more Competitive business environment

A competitive business environment is a critical driver of economic growth for any jurisdiction. Zambia’s business environment is not very competitive compared with the rest of Africa and it is essential to Zambia’s future that this position is enhanced. A key tool in measuring competitiveness is the Competition Index. The measurement shall comprise of: Labour costs, Land and accommodation, Electricity, Fuel, Gas, Air freight, Air travel, Telecommunication cost, Proximity to markets, Taxation severity, Labour skills and Industrial disputes.

A competitive business environment involves:

i) Measuring/addressing cost aspects impacting on competition (Competition Index)

Our government will introduce a Competition Index to measure and monitor cost aspects impacting on competition. The Competition Index will objectively compare business and industry sector costs and constraints in Zambia’s regions.

The Competition Index will provide the essential measurement necessary to focus government, business and the community on those competitive areas where the state may be weak and should be addressed, and those areas where is strong and should be maintained. This type of detailed analysis is unique in Africa.

To address constraints highlighted in the Competition Index, the government will initiate a strategic response. The Response to the Competition Index will be a project that takes the findings from the Competition Index to a large number of stakeholders, seeking their ideas for initiatives to address competitive constraints, and then implementing them. The Response to the Competition Index will be dealt with in detail in the competitiveness section of the Industry Development Plan.

ii) Promoting business enterprise development 

To ensure all growth opportunities for local business are maximised, the Industry Development Plan will provide a broad range of enterprise development programs to business to tactically improve Zambia’s chances of securing growing export and import replacement trade. Issues such as access to finance, networking between complementary business to create greater levels of scale and scope, trade and marketing assistance and promoting entrepreneurship and innovative ideas will all encapsulated in industry-based programs.

Business enterprise development will be delivered through industry-based programs that will be provided by the Department of Economic Development, the Department of Primary Industries, Water and Environment, the Department of Infrastructure, Energy and Resources, the Department of Tourism, Parks and Heritage and the Arts, and the Department of Education’s Office of Post-Compulsory Education and Training.

iii) Reducing regulation and eliminating unnecessary regulation

Unnecessary regulation that constrains business activity will be stripped away by our government. The government will put in place a comprehensive program to ensure only relevant legislation and regulation remains or placed on the statute books. Using the principles of National Competition Policy, the government will put in place a mechanism to review all existing legislation for anti-competitive features, which will be removed unless a strong public benefit test shows that they are in the public’s best interest.

iv) Securing significant infrastructure developments projects.

In the first five years, we will accomplish major infrastructure projects, including natural gas, wind energy, fibre optic network, the high-speed trains and water developments to boost agricultural production.

The introduction of natural gas will provide competition to drive down the cost of energy and will also allow some manufacturers to diversify their products where natural gas is an energy input.

We plan to commence a multimillion-dollar wind energy project. More so a multimillion-dollar ZamPower project, which will allow the country to join the National Electricity Market via a cable across the provinces. A fibre optic cable will also be laid across the country, with the intention of providing further telecommunications competition in the market place.

B. Securing significant investment, particularly in those sectors that contribute to export growth and import replacement.

Key elements of securing significant investment across industry sectors are the promotion of infrastructure and major project development in the regions and working closely with industry sectors. This policy is a key feature of the ZANC Government’s strategic approach to the n economy.

Regional Economic Development and Investment (REDI) plans will provide an outline of economic development at a regional level to assist in the assessment of infrastructure needs and strategic planning issues and identify priority targets for investment attraction.

REDI plans will be developed to provide a greater depth of understanding of economic growth and development in the regions. These plans will assist both the central and local governments with decisions regarding key support needs such as roads, land availability, water supplies, waste management facilities, training and education and workforce skills. This second order infrastructure must be carefully considered and fully planned to meet anticipated demand and most efficiently use valuable resources. It is vital that second order infrastructure is able to keep pace with developments in broader infrastructure as well as the growing economy.

A State Infrastructure Plan will analyse infrastructure, including transport, energy, water, telecommunications, land use and regulation against demand. It will provide the foundations for a strategic plan for all forms of economic infrastructure, that:

• Is directed by industry and community demands  
• Capitalises on the synergies created by planning different forms of infrastructure in a single process  
• Identifies priority strategic gaps  
• Establishes clear long-term directions for infrastructure provision and management.

Industry Councils will operate as a conduit between government and industry, and formulate specific industry-sector plans. Through this process, the Industry Development Plan will continue to develop, being guided and driven by industry stakeholders.

The government’s Economic and Social Infrastructure Fund (ESIF) will provide for the facilitation of direct and indirect opportunities arising from infrastructure and major projects. Specific funding to enable the Department of Economic Development to manage issues affecting the securing of major projects and promote enterprise development will complement the ESIF. In addition, a number of other government agencies and business enterprises will be involved with energy and infrastructure will devote considerable expenditure to infrastructure developments, which have economic as well as social and community consequences.

WORLD TRADE AND DEBT  

As was the case during colonial rule, Zambia's role in the world economy remains to produce raw materials for use in developed nations. Whatever economic development has occurred in our country since the end of colonial rule has reinforced this pattern. Investment by international corporations and most foreign governments has concentrated on expanding production of exportable mineral and agricultural raw materials. The emphasis on exports has left inadequate resources for developing domestic industry or changing the traditional, underdeveloped system of Zambian smallholder food production. Neglecting our food-producing sectors has led our country to increase the dependence on raw-material exports and has required importing food to feed her people.

The country's trade position has faced further challenges since the 1960s. The prices of manufactured goods and fuels imported by Zambia increased substantially, while the prices of almost all products of Zambian mines and farms declined or fluctuated. This downturn means that our country not only has to make do with fewer needed imports, but also has to go into international debt to meet our financial obligations. Zambia has also been put at a disadvantage by the protectionist trade policies of industrialized countries, which admit unprocessed raw materials tax-free but impose substantial tariffs on imported products made from the raw materials.

As a consequence of our internationally disadvantaged status, we have had to borrow money from foreign lenders to cover the difference between the export earnings and the spending for imports. The amount of accumulated external debt owed by sub-Saharan African countries has risen from less than $6 billion in 1970, to $80 billion in 1985, to $230 billion in 1999. Interest payments to foreign creditors siphon away precious foreign exchange earnings. Such pressures on export earnings have led African governments to make stringent cuts in imports through high tariffs and outright prohibitions. (From Encarta: The Economy section of this article was contributed by Assefa Mehretu)

Way forward  

• Change the role for Zambia to the producer of finished goods for the developed nations. This shall be a take or leave it situation. Zambia should not be forced to produce for other nation's benefit. Since we produce the largest percentage of the world products we should be proud to state our demands

• Develop a sustainable food production and reserve for local consumption. This is a pre-requisite to being independent of foreign debt and conditions.

• Zambia needs to increase its capacity to process and manufacture goods for local consumption. Under a local market situation, Zambia should provide whatever quality of goods in her power. From this the people will eventually work hard to improve the quality. Importing quality goods at the expense of national development is unbecoming.

• Total and unconditional refusal of protectionist policies. It is a tit-for-tat situation. If tariffs are put on imported goods then tariffs are to be put on exported goods. The indisputable fact is that, without Africa's substantial raw materials, the world would run low in manufactured export goods. There should be no tax-free raw materials. With a stable one currency in Africa, Africa shall be able to trade at an equal footing with those who need her products.