Before we look at the future development in Zambia, we have to remember that there are four factors that power an economy: consumers, investors, government, and a favourable trade balance. Some economies such as China rely on favourable trade balance and Foreign Direct Investment (FDI) for their growth. For example according to the Chinese Ministry of Commerce, from 1990 to 2007, China received $748.4 billion in FDI. At the same time, since its economic liberalization, China has recorded consistent trade surpluses with the world. For example China has registered trade surpluses of $102 billion for 2005, $177.47 billion for 2006, $262.2 billion for 2007, and $295.47 billion for 2008. China currently has accumulated nearly two trillion dollars in foreign exchange reserves.
In contrast to the China, the United States has relied on consumers and the government for its growth. According to Peter G. Gosselin citing Roach of Morgan Stanley Asia, U.S. consumers constitute only about 4.5% of the global population, yet they bought more than $10 trillion worth of goods and services last year. In contrast the Chinese and Indian consumers combined which account for 40% of the global population bought only $3 trillion worth. He goes on to point out that according to government statistics, from 2001 to 2007, U.S. consumer spending shot up from a little over 73% of the economy to nearly 77%.
Coming to our scenarios in Africa, mostly Zambia...with the US$13 billion economy running at an average of 6.5% annual growth, Zambia's new leaders have no choice but to continue attracting FDI into the country and foster a two way approach to economic development. The expansion of mining Industry especially in the North Western province need to be encouraged and further collaborations on a win to win basis on issues of Taxation need to be looked at with sober minds. Increasing trade surplus by providing an environment for non-traditional exports to increase dramatically will help Zambia fast track its diversification activities, causing a reduction risks related to depressed commodity prices. Zambia with an estimated export of US$7.181 and Import of US$ 4.676 in 2011 will need to continue recording trade surplus in the later 2011 and the next 2 years to be able to accommodate government expenditure on various campaign promises by Mr Sata. The new leadership will need to approach their poverty issues through creation of employment opportunities using the private sector as opposed to government increasing the civil service in order to fulfill campaign promises. if the later is what the government will pursue, a significant increase in non productive will exert immense pressure on the country's ability to maintain inflationary challenges...
DEYOS-ZAMBIA
Policy Analysis Directorate
Rapid urbanisation is creating a huge demand for jobs and services in cities, and may cause elections pledges that come back to haunt the country and the economy.
ReplyDeletePrivatised state enterprises and foreign investments could become political targets, with possible controls on expatriate labour or higher taxes for the mining sector.