Industrialisation is a key driver of socio-economic transformation and job creation in both
developed and developing countries. By definition, this concept can be understood as the
development of the manufacturing sector or the transformation of an agrarian society into one driven by the use of technology and machinery to enable mass production. The industrialisation of a country’s economy not only results in mass production of goods for both consumption and export but also presents an opportunity to improve the standard of living.
Like most African countries, Zambia at the time of independence was mainly an agrarian economy that heavily relied on agricultural yield. From 1972, the manufacturing sector’s contribution to Gross Domestic Product (GDP) increased from 13.5% to about 35% in 1991, transitioning the country gradually into a modern society, evidenced by the growing number of manufacturing companies and the use of modern technologies. However, the country’s manufacturing sector’s contribution to GDP plummeted from around 35% in 1991 to less than 6.8% in 2019. The declining pattern indicates that the country experienced deindustrialization in the past 30 years.
In the recent past, general economic growth performance declined from 9.8% in 2010 to 1.4% in 2019 meanwhile the manufacturing sector’s contribution declined from about 8.0% to 6.8% in the same period. Further, the downward spiral needs to be managed with outmost consideration of the critical role played by industrialization in fostering economic development. Factors that affect industrialisation and the manufacturing sector include the country’s tax policy, cost of production as well as the regulatory framework.
The Zambia Association of Manufacturers (ZAM) targets to attain 20% manufacturing sector contribution to GDP in the next nine (9) years. This is a mammoth task that demands the collective effort of both government and the private sector actors. Through ZAM, a number of local manufacturing companies have lamented over the high cost of production and the harsh business environment that has made productivity and production laborious. To remedy the problem of high cost of doing business, the existing tax policy should be revised in order to reduce import duty. In essence, strong working partnerships between the manufacturing sector and key government bodies should be promoted in order that tax and trade policies are framed on the basis of primary data.
Creating an enabling environment for manufacturing companies was one of the notable highlights of the President’s speech at the official opening of the 1 st session of the 13 th National Assembly. In this regard, streamlining the number of levies, licenses, fees and permits required for business operations will greatly support micro, small and medium enterprises (MSMEs) will demand. This will accord local producers the competitive advantage to exploit local, regional and international markets for trade. The Proudly Zambian Campaign (PZC) under ZAM, bridges the gap between local companies that join the campaign and compliance agencies like the Zambia Bureau of standards.
The campaign facilitates the vetting process and in doing so, promotes the manufacturing of high-quality goods.
Moreover, industrialisation is fueled by technological innovation and advancement. However, the use of high technologies demands knowledge and expertise which is currently lacking due to the absence of modern equipment in skills training institutions. It is more feasible to translate informal human capital into the manufacturing sector as compared to the formal service industry. This is for the obvious fact that formal employment demands advanced levels of education and skill that most youths do not possess.
Zambia’s formal service industry mainly encompasses banking, insurance and communications among others. Therefore, it makes greater economic logic to heavily invest into developing the manufacturing sector without neglecting the service industry. This will demand that modern technologies are slowly adopted and the necessary expertise is developed through higher education and training. In the process, Zambian manufacturers will be pushed to adopt the necessary technologies to compete with world class goods and this will in turn foster industrialization. Furthermore, in order to support growing manufacturing companies, financing mechanisms and credit facilities must be made available to local entrepreneurs. Financing mechanisms could take the form of public private partnerships (PPPs) with the potential of establishing more special economic
zones and industrial parks. This would demand strong state-business relationships and a conducive business environment. Meanwhile, credit facilities can be presented in form of competitive grants, subsidies and low interest loans to support local manufacturers. Local development banks can be adequately utilised to support sector development and mobilize the necessary resources.
In conclusion, at the core of industrialisation is the manufacturing sector which possesses great potential to create jobs, trigger wealth creation and alleviate poverty. It is important to note that manufacturing also accurately aligns with the progressive nature of industrialisation and will extensively foster national development. Fostering industrialisation is cardinal if Zambia is to return onto a high-growth path and achieve its goals of economic, human and social development.
