Zambia has high rates of unemployment and is overly dependent on mining for growth and foreign exchange. In 2018, the unemployment rate was 12.6 percent and the youth unemployment rate was 17.4 percent. With a growing population, this issue will only become worse without intervention and growth in labour-absorbing sectors of the economy.
This study researches ‘Industries without Smokestack’s (IWSS) which have characteristics that resemble those of the manufacturing industry namely: being tradable, having higher productivity relative to average economy-wide productivity; exhibiting capacity for technological change and productivity growth, economies of scale, and agglomeration; and, most importantly, being able to absorb large numbers of moderately skilled workers – similar to labour-intensive manufacturing industries. IWSS are seen as having the greatest potential of charting a new path of structural transformation for Africa.
The Government has recognised this issue. Unemployment is a critical policy priority in Zambia and the analysis will be of wide interest to policymakers. The Seventh National Development Plan highlights the Government’s commitment to prioritise diversification and job creation.
The project involves cross-country sectoral research aimed at:
- Uncovering the fundamental factors accounting for the relatively weak link between economic growth and job creation;
- Assessing the employment creation potential of IWSS relative to traditional sectors; and
- Identifying enabling conditions for the development of IWSS i.e. infrastructure, institutions, and the governance and macro environment.
The research project will also assess the labour skills required to develop IWSS relative to existing labour skills and suggest interventions to address mismatches.