Growth promotion through industrial strategies

Zambia’s manufacturing sector has performed relatively well during the past decade. During the 2000-2013 period, the manufacturing sector grew by 5.5% CAGR. This highlights a mildly positive trend, just below the 7.2% CAGR of total GDP. Employment in the manufacturing sector increased fourfold from 55,600 people in 2005 to 216,700 people in 2012. Approximately one third of total manufacturing jobs were in the formal sector. Whilst mining dominates FDI inflows, an increasing share of FDI has been targeting the manufacturing sector. Manufacturing FDI stock totalled US$ 1.3 billion in 2012. According to industrial index data, two sub-sectors emerge as having particularly high potential: food, beverages and tobacco, and metal fabrication. Cement had a very strong growth but has limited potential for further downstream processing and industrial development. Turning to Zambia, export performance confirms that these two sub-sectors had, to different degrees, shown considerable level of dynamism and international competitiveness in recent years. The trade data shows interesting patterns in relation to non-traditional exports: these are fast-growing, directed at regional markets; and there is a small but growing share of value added products. Apart from copper semi-fabricates, these consist of cement, animal fodder, milling products, essential oils, iron and steel products.

The study analysed trends and patterns in industrial performance over time, as well as industry-level capabilities and competitiveness; scoped high potential sub-sectors, with particular attention to resource-based industries and regional markets; and reviewed at broad level the policy framework for industrial development.