Beyond ‘Africa rising’: Development Policies and Domestic Market Formation in Zambia

ABSTRACT

The ‘Africa rising’ narrative sparked a lively discussion of the powers of orthodox economic policies to ensure good economic governance and attract private investments to further stimulate economic growth. The 2014 commodity bust and the Covid-19 pandemic effectively ended this discussion and triggered a critical examination of the fundamentals of the narrative. This study investigates how orthodox economic policies have affected the strive for structural transformation in a resource-rich economy like Zambia. It argues that there is a mismatch between the mostly orthodox policies that have driven policy formulation and the needs of the domestic private sector. Therefore, it makes a case for setting domestic market formation as a guiding principle for future economic policies, specifically by focusing industrial policy on business climate, rather than investment climate, and by focusing on capacity building, upgrading, and growth in consumer and inter-sectoral demand, rather than only liberalisation and good economic governance.

Keywords:

• Africa rising
• zambia
• domestic market formation
• industrial policy
• private sector

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 While the World Bank and the IMF wielded substantial influence over Zambia politics in the first decade of the new millennium the next decade saw a shift in power relations where the GoZ – as a result of booming commodity prices, lower aid dependency and increasing interest from ‘emerging’ donors – managed to change bargaining power vis-à-vis the IFI and the ‘traditional’ bilateral donors (Fraser, 2008; Kragelund, 2014).

2 Following Moore and Schmitz (2008) we distinguish between a focus on risk-reducing investment climate and cost-reducing business climate. In policy terms the investment and business climate policies are often conflated but for analytical claity it is important to separate what is essentially a focus on reducing unpredicatbility and uncertainty via reliance on formal rules and protection of property rights (investment climate) from a focus on how difficult and costly it is to do business in a particular sector (business climate).

3 Aquirre Aguirre Unceta (2021: Table 1) uses data from the World Bank and the IMF and depicts an even lower contribution of manufacturing to GDP in Zambia (less than 7% in 2018 and 2019).

4 Construction companies wishing to bid for public tenders in Zambia have to register with the National Construction Council, which grades construction companies on a scale from 1 to 6 according to their financial and technical capabilities. Tender documents usually stipulate the grade categories of companies that can bid. There are no Zambian-owned companies at grades 1 and 2 (Kragelund, 2009).

Additional information

Funding

This work was supported by The Consultative Research Committee for Development Research, Denmark: [Grant Number 11053-CBS].

Notes on contributors

Søren Jeppesen

Søren Jeppesen is Associate Professor of Business and Development Studies, Department of Management, Society and Communication at Copenhagen Business School. His research interests include the growth conditions for Developing Country Firms, whether institutional, industry or firm level, including the role of state-business relations. In particular, his research focuses on Small and Medium-Size Enterprises (MSEs), firm strategizing when engaging or not engaging in socially responsible practices. His research has mainly centered on countries in Eastern and Southern Africa as well as Vietnam and India among others in the food processing and garment industries. He has published in Business & Society, Journal of Business Ethics, Business Strategy and the Environment, Development in Practice, among others.

Peter Kragelund

Peter Kragelund is Dean of Social Sciences, Roskilde University. His main interests include changes in the global economy and how these changes affect developing countries. In particular, his research has examined how the tectonic shift brought about by 'emerging' economic actors' renewed interest in Africa has affected the political economy of the host countries. He is the author of ‘South-South Development' (Routledge) and ‘Africa's Shadow Rise: China and the mirage of African economic development’ (Zed Books). His work has also been published, inter alia, in Cambridge Review of International Affairs, Development and Change, Development Policy Review, European Journal of Development Research, Extractive Industries and Society, Forum for Development Studies, Journal of Modern African Studies, Resources Policy, Review of African Political Economy, Third World Quarterly, and World Development.