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  • Publication Date: 11-2021
  • Content Type: Commentary and Analysis
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: The Zambian National Budget for the year 2022 was announced by the Minister of Finance on 29th October 2021. This marked the first Budget of the newly elected United Party for National Development Government following the August 12, 2021 national election. As such, this represented the first formal statement of the new Government’s economic policy. While the Budget contains many transformative ideas, it is important to zoom in on the areas where caution is imperative and what those specific details means for the people the Budget is meant to serve, and for the whole economy. This paper therefore analyses the 2022 National Budget under the theme: ‘Transformation through Inclusive Growth: Achieving a Balanced Recovery’. The paper present insights into the key fiscal and macroeconomic priorities, debt management and international financing relations, the real sector policy options to stimulate the balanced and green recovery of the economy and taking development closer to the people. The paper also gives pointers for strengthening the governance environment for effective budget execution and for sidestepping the perils of the ambitious decentralisation programme.
  • Topic: Governance, Budget, Economic Growth, Macroeconomics, Fiscal Policy, Revenue Management
  • Political Geography: Africa, Zambia
  • Publication Date: 09-2020
  • Content Type: Commentary and Analysis
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: Zambia has experienced weakening macroeconomic conditions in the past 10 years, with falling real GDP and per capita GDP growth, a depreciating kwacha and rising inflation… Against this backdrop, the 2021 National Budget is themed: “Stimulate Economic Recovery and Build Resilience to Safeguard Livelihoods and Protect the Vulnerable”. Many sub-functional big winners are expected in 2021 in terms of allocation increases (e.g. FISP, Voter Registration and Social Cash Transfer), and some critical losers are also expected, particularly Empowerment Funds.
  • Topic: Budget, GDP, Economic Growth, Macroeconomics
  • Political Geography: Africa, Zambia
  • Author: Florence Banda-Muleya, Shebo Nalishebo, Mbewe Kalikeka, Nakubyana Mungomba, Ignatius Masilokwa, Caesar Cheelo
  • Publication Date: 06-2019
  • Content Type: Working Paper
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: The economic crisis of 2015 destabilised Zambia’s economic performance. The depreciation of the Kwacha and its pass-through effects led to inflation of as high as 22% and growth, at 2.9%, was far below the 5% target. The overall Budget deviation was 15% of Parliamentary appropriations in 2015, disrupting planned activities and attainment of set macroeconomic objectives. There were huge variations between what the consequent national Budgets committed to do and what they actually did. To fix this and nudge the country back towards high sustained economic growth, the Economic Stabilisation and Growth Programme (ESGP) was crafted in 2017. The five-pillar plan aimed to ensure prudent fiscal management by providing a system of accountability and a standard against which results could be measured, among other things. The aim of this paper is to review the ESGP, particularly, its performance in 2018. The paper sets out to understand how well Zambia faired in implementing the ESGP as well as to highlight the broader fiscal trends recently. It ultimately seeks to make recommendations about how Zambia can revive its path to economic stability and growth. The paper focuses tightly on the first two pillars of the ESGP, i.e. (i) restoring budget credibility; and (ii) enhancing domestic resource mobilisation and refocusing public expenditure. The remaining three pillars are slated to be reviewed in the second half of 2019.
  • Topic: Budget, Finance, Economic Growth, Economic Stability
  • Political Geography: Africa, Zambia
  • Publication Date: 09-2019
  • Content Type: Commentary and Analysis
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: The 2020 National Budget is centered on “Focusing national priorities towards stimulating the domestic economy”, a break from fiscal consolidation which has threaded the themes of recent past Budgets. This Analysis describes how Zambia should ensure that the expansionary fiscal policy stance and debt accumulation yield growth rather than stifling it; implementation of the 2020 Budget plants and nurtures seed for growth; and it minds the rising climate change adversities and diminishing social sector support. The Analysis offers key insights and recommendations.
  • Topic: Climate Change, Budget, Economic Growth, Fiscal Policy
  • Political Geography: Africa, Zambia
  • Author: Francis Ziba, Mwanda Phiri
  • Publication Date: 03-2017
  • Content Type: Working Paper
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: The last two decades have seen rapid economic growth in Zambia and the proliferation of foreign supermarket chain stores. However, this growth has translated into neither significant job creation nor significant poverty reduction. Furthermore, while the expansion of supermarket chains in Zambia has continued, local processing firms’ participation in supermarket value chains remains limited. This paper assesses the hindrances to local processing firms’ participation in supermarket value chains and how those firms’ participation might stimulate growth through regional trade. Our results show that local processing firms’ participation in regional supermarket value chains is constrained by a number of factors that pose either strategic or structural barriers to entry.
  • Topic: Economic Growth, Private Sector, Retail, Regional Economy, Value Chains
  • Political Geography: Africa, Zambia
  • Author: Shebo Nalishebo, Albert Halwampa
  • Publication Date: 03-2015
  • Content Type: Policy Brief
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: In recent years, the Zambian economy has been growing strongly and the country has increasingly been faced with the need to plug huge infrastructural gaps. However, the slowing down of bilateral and multilateral financing due to austerity measures in developed economies and the World Bank’s reclassification of Zambia as a lower middle income country has led financiers to divert concessional loans to other needy countries in the low income bracket. Consequently, Zambia has had to diversify its budget and project financing options by issuing Eurobonds which are commercial borrowings by governments in currencies other than their own - in Zambia’s case, it is denominated in US dollars. Since 2012, the Zambian Government has issued two ten-year sovereign bonds collectively worth US$1.75 billion to mainly finance infrastructure projects. These two bonds amounted to 37% of Zambia’s external debt in 2014. With an average coupon rate of 6.9%, the two bonds have bullet repayment structures, implying that lump sum principal payments will be paid at the end of their respective ten-year maturity periods. The coupon rate is the interest rate at the time of issuance. Notwithstanding the high interest payments of over US$125 million annually, the bullet structure of the two bonds may have significant repayment risks as the country is expected to pay out the US$1.75 billion within a two-year period (in 2022 and 2024). The country may experience difficulty in repaying or refinancing the face value at maturity if the money is not spent in activities with high economic returns and if there are adverse changes in its exchange rate or international market conditions. The risks are already on the horizon – the recent depreciation of the Kwacha has increased debt servicing costs, while the low copper prices have reduced the much-needed export revenues used to service debt. Has Zambia dug itself into another debt hole? What measures can be put in place to mitigate the risk of a pending default?
  • Topic: Economy, Economic Growth, Bonds, Eurobonds
  • Political Geography: Africa, Zambia
  • Publication Date: 12-2013
  • Content Type: Working Paper
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: The middle class is increasingly becoming a topical issue in Zambia. However, the lack of a definitive measure of the middle class in the country makes it difficult to have targeted policies on this group of people, perceived worldwide to be the drivers of economic growth. With high and rising income inequality in Zambia, we propose two operational definitions of the middle class by exploring the middle class from a median perspective and from a ‘relative affluence’ perspective. Defining the middle class on the basis of the ‘actual middle’ versus ‘relative affluence’ provides vastly different pictures. The results show that individuals and households that fall in the ‘relative affluence’ group have achieved a modest standard of living and are actually near the top of the country’s income ladder while households in the actual middle of the income distribution in Zambia have a standard of living well below what can be perceived as a ‘middle-class lifestyle’ elsewhere. This requires targeted policy designs when referring to changes in the economic status of the Zambian middle class. We propose a household income distribution framework which combines both the actual middle households and the relatively affluent middle households to create an enabling environment for inclusive growth policies, rather than just pro-poor policies.
  • Topic: Education, Economic Growth, Class, Middle Class
  • Political Geography: Africa, Zambia
  • Author: Bernard Banda, Joseph Simumba
  • Publication Date: 11-2013
  • Content Type: Policy Brief
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: Export-transactions data for the period 1999-2011 in Zambia suggests that much of the growth in the value of exports has been driven by the contribution of new exporters than pre-existing exporters. The catastrophic growth among pre-existing exporters is explained by the high death rate that occurs within the first two years of exporting. Approximately between 50%- 60% of exporters will not survive beyond the year of export commencement. We discuss the potentially important policy implications of these rather surprising results relative to the sizeable evidence that shows it is the deepening of export values among existing exporters that drives much of the year-on-year growth in exports for many advanced and developing countries.
  • Topic: Economic Growth, Exports, Trade
  • Political Geography: Africa, Zambia
  • Author: Shebo Nalishebo
  • Publication Date: 12-2013
  • Content Type: Policy Brief
  • Institution: Zambia Institute for Policy Analysis and Research (ZIPAR)
  • Abstract: The middle class is increasingly becoming a topical issue in Zambia. However, the lack of a definitive measure of the middle class in the country makes it difficult to have targeted policies towards this group of people, perceived worldwide to be the drivers of economic growth. With high and rising income inequality in Zambia, we define the middle class based on the median and on a ‘relative affluence’ perspective. Findings show that the ‘middle class’ (as understood in everyday usage) is not in the middle of the income distribution. And those who are in the middle are not ‘middle class’ (in the sense of being above some minimum level of affluence). Defining the middle class on the basis of the ‘actual middle’ versus ‘relative affluence’ provides vastly different pictures. This implies that targeted policy designs are required when referring to changes in the economic status of the Zambian middle class. If the middle class is conceptualised in terms of relative affluence, growing the relative size of the middle class would have economic benefits such as growing the pool of people with skilled occupations and raising consumer demand within the domestic economy, which could lead to higher economic growth. In contrast, if the middle class is defined as the actual middle group, then increasing the relative size of the middle class – many of whom are quite poor – would imply supporting economic policies that favour the poor and non-affluent and thus decrease the income gap. This view of the middle class provides an important tool for understanding the status of the ‘average’ Zambian and provides policy makers with a more balanced assessment of development in the country.
  • Topic: Economic Growth, Class, Middle Class, Society
  • Political Geography: Africa, Zambia