11 December 2012

Zambia: Nation's Economic Path Continues to Glow

ZAMBIA's economic path has for a long time now been brighter by the year.

This year, the World Bank projects an economic growth rate of 7.3 per cent, which is above the 6.8 per cent recorded last year.

It suffices to mention that the 7.3 per cent the country is expected to record in terms of economic growth is within the real Gross Domestic Product (GDP) growth of above seven per cent that the Government targeted to achieve under the 2012 national Budget.

At that rate, Zambia's economy is growing at a percentage higher than for most of the countries within its economic category in the region and beyond.

What is even more reassuring is that the expected growth is broad-based, not just for the overused mining sector.

Paradoxically, the mining sector is expected to record a downturn because of the contraction in output and copper prices.

The growth has, undoubtedly, been as the result of the sound economic policies the Government has initiated which have attracted steady inflows of both Foreign Direct Investments (FDIs) and local ones.

According to the World Bank, the FDIs have increased from US$350 million 2009 to $991 million this year, shaming all prophets of doom.

The intrinsic parts of sound economic policies are the measures put in place to address and forestall corruption in the country.

The current fight against corruption is, therefore, not misplaced.

Interestingly, the fight against graft is buttressed by current fiscal discipline and financial prudence which have led to the limiting of the Government borrowing to about 3.5 per cent of the GDP.

We are better off soldiering on with these measures because they are yielding dividend in terms of attracting the FDI inflows and the general economic goodwill from the international community.

The next step, however, is to ensure that these economic benefits translate into better life for the majority of the citizenry.

For the macroeconomic indicators to be more beneficia l, they should result in the reduction in the prices of goods and services, especially that the year-end inflation rate is expected to be about between six and seven per cent.

We further expect the reduction in the real interest rate for loans and increased access to the loan facilities.

As the Work Bank states, the Government has now a mammoth but attainable task of addressing poverty and inequality among the people.

From 2000 to 2010, there was little improvement made in the reduction of poverty among the people particularly the rural dwellers.

One reason advanced for that is that, the growth was driven by industries like mining, construction and financial services which did little to create more jobs.

This means that the current diversification efforts sh ould be doubled up.

Furthermore, the urban-centred growth failed to garner enough trickle-down effects to the people who live in the rural areas.

In the end, growth ended up enriching some urban dwellers while impoverishing the people in rural areas.

It is, therefore, imperative for the Government to heed the World Bank's advice to address these challenges.

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