Day 2: Country Session – Zambia

The session was opened by the Country Director, Alan Hirsch, who introduced the IGC programme including staff and presenters.

Three presentations were made; the first one; ‘The urban Research Agenda: In Zambia and elsewhere’ is a result of a core-generation process by Professors Ed Glaeser and Nava Ashraf in Zambia in August 2014. The second was on ‘The Impact of Teaching Negotiation Skills to Girls on Schooling Outcomes’ by Nava Ashraf and the third was on ‘Birth, Death and Survival of Exports in Zambia’ by Joseph Simumba from the Zambia Institute for Policy Analysis and Research.

Professor Ed Glaeser (via video-conferencing) gave an overview of the growth of the urban population across the world and how countries stand to benefit from the agglomeration economies that come with the growth of cities. He also noted that there is significant correlation between urbanisation and incomes within and across countries. He however, noted that as cities expand they promote both bad and good contagion. Bad contagion to mean that disease can easily spread due to proximity. He gave a recent example of the Ebola epidemic that has currently affected some of Africa’s cities. Professor Glaeser however observed that the downside of urbanisation can be addressed through responsible policies such as the provision of clean water. Good contagion on the other hand refers to the positive effects of agglomeration such as the spread of ideas which characterises dense cities.

Professor Nava Ashraf focused on the identification of research gaps in water, industrial clusters and skills development. On water, the main issues are to assess if there are enough private benefits to incentivise households to connect to water or whether there are too many social benefits to consider a household subsidies for water connection. In the area of industrial clusters, the interest is to test the spread of business ideas among cluster members while the skills development project would assess productivity of Zambia’s labour force if skills were provided.

Mr Bernard Kamphasa who is the Permanent Secretary for Policy Analysis and Coordination in the Zambian government was the discussant to the urbanisation paper. He pointed that Zambia is in the process of developing an urban policy and sees the work of the IGC as potentially useful for government. He also pledged his government’s support to the core-generation model with IGC researchers.

The second paper by Nava Ashraf was an overview of the project that has been training girls in Zambia on non-cognitive skills. Professor Ashraf noted that Zambia has high school drop-out rates for grade 7 up to 12. For females, the rates are 3 times as much as boys. This is due to various demands placed on girls which limit the amount of time spent in school. Negotiation skills are therefore meant to empower girls so they can negotiate with their parents for time and for money to remain in school.

The third paper by Joseph Simumba, which used Zambia Revenue Authority’s export transactions data, highlighted that Zambia’s exports have been growing in previous years though the mining sector accounts for most of the growth (70-75%). However, non-traditional sectors of the economy have also continued to grow as the government pursues diversification policies. The results of the paper show that about 50% of new exporters do not go beyond their first year of exporting, meaning that the rates of exit are very high. The results also showed that the year on year growth in exports recorded in Zambia actually come from new exporters and is not an indication that exporters have a long life span in the export market.

On policy implications the paper pointed out that it appears that new entrants lack knowledge of the export market until they get in the business and fail. It would be useful as a matter of policy to train would be exporters on the characteristics and challenges of the export market if survival is to be assured. Exporters also tend to behave in the same way as investors in the sense that they wouldn’t export in times of economic uncertainty.

In discussing the paper, governor of the Zambian Central Bank, Dr Micheal Gondwe agreed with the paper’s findings and acknowledged the role mining plays in Zambia’s exports as well as the rising significance of non-traditional exports. He further pointed that exporters in Zambia face various challenges including lack of training on the nature of the export market. He further pointed the lack of infrastructure such as good roads Zambia being a landlocked country. Other challenges include access to finance which means that Zambian exporters have to compete with other exporters in the international market who may have access to cheaper credit. However, the governor also observed that African exporters will need to take advantage of regional markets for them to grow rather than focusing on European markets. He cited Kenyan exports to COMESA which are more than total exports to Europe.

By Felix Mwenge, Country Economist, IGC Zambia