Zambia has made significant strides in the improvement and stabilisation of the macro-economic environment to support industrial development, according to Bright Chunga, president of the Zambia Association of Manufacturers
Chunga was speaking in Livingstone at a business seminar organised by the Zambia Development Agency, where he said the annual growth in manufacturing value has remained steady, registering growth of 4.2 per cent and five per cent in 2010 and 2011, respectively.
Despite the successes achieved in supporting industrial development, a number of issues still however needed to be resolved, according to Chunga.
“Growth is still below expectation and the potential of the sector. During the period of economic expansion in 1964 to 1974, manufacturing was one of the fastest growing industries in Zambia, achieving an annual average growth rate of 12.6 per cent,” he elaborated.
Effective implementation of linkage development policy is needed between manufacturing and other resource sectors such as mining. Such a policy should include policy instruments such as local content, capacity building and competence enhancement for manufacturers, Chunga said.
There is also need for the alignment of policies to ensure that they are consistent and mutually reinforcing, he added.
“Policies which exempt investors in resource sectors from paying import duties on inputs while subjecting local manufacturers to the same should be done away with as they undermine linkage development,” Chunga pointed out.
In order to grow the manufacturing sector, there is a need to ensure strong partnership between the public sector, private sector and civil society, a precondition for aligning stakeholder visions for successful policy development and implementation, he said.
There is a need to facilitate access to long-term finance by developing the financial sector, deepening financial intermediation and using policy instruments vested in the Bank of Zambia, Chunga added.
Following independence, the manufacturing sector’s contribution to total gross domestic product (GDP) rose from 6.9 per cent in 1964 to 13 per cent in 1974, with the sector’s contribution going as high as 26 per cent of total GDP at one point.
The manufacturing value added as a percentage of GDP has dropped to 9.7 per cent, 8.9 per cent and 8.4 per cent in 2009, 2010 and 2011, respectively, despite positive annual growth.
The highest contributors to manufacturing GDP as of 2010 were the food, tobacco and beverages sub-sector (36.9 per cent) and the basic metal and fabricated engineering products sector, which accounted for 24.9 per cent.
During the period under review, the textile garments and leather products industry accounted for 14 per cent, chemicals, plastic, synthetic rubber and other chemical products for 10.7 per cent and wood and wood products for seven per cent.
The positive growth registered during the period from 1964 to 1974 was attributed to unprecedented investment in infrastructure and manufacturing, macro-economic stability, flourishing private sector (dominated by foreign-owned firms) and the good national development planning framework.
Nawa Mutumweno
