What are constraints to inclusive growth in Zambia

1
What are constraints to inclusive growth in
Zambia?

• Discussants comments
• J G Kydd

2

• Careful discussion of recent CSO data given
  convincing overview
• Sympathise with conclusion core problem is
  negative coordination externalities
• would have liked to see this point better
  explained and illustrated
• Coordination and externalities are loaded words
• What are the coordination problems?
• Espec interest in coordination failures which
  prevent small farmers from accessing inputs and
  adequately stable and adequately rewarding output
  markets

3

• Externalities draws our attention to possible
  government actions (what might these be, are they
  plausible given the political economy
• the paper has considerable reference to
  corruption and to inefficient policies viz.
  fertiliser subsidy but does not really tackle
  drivers of policy and issues of government
  competence. What is the world view and
  project(s) of the political elite?
• Externalities also lets us think about how
  technological and private/collective action might
  erode these effects - what might these be in the
  Zambian context?

4

• Conceptual framework
• like it and the way in which it has been
  adapted appreciate that it must be parsimonious
  but question
• Absence of ToT effects, so cannot incorporate
  important strongeffects of trends in e.g. copper
  prices, cotton prices, exchange rate movements
  (so real appreciation comes in the narrative as a
  major explanation but not in the model)
• given remarks about importance of coordination,
  framework has government failure and coordination
  failure as separate determinants of returns to
  economic activity but interaction of these a
  fertile area for enquiry directed to answering
  question posed in paper

5

• Comments on bits of the story
• copper production increases before prices?
  Response to investment and new management from
  long-delayed privatisation (also a major story
  hear about govts inability to capture a
  reasonable share of copper price boom
• Absence of discussion of formal labour markets, a
  significant issue for investment in restructuring
  enterprises
• Cotton story a very positive one but not
  recognised as such especially given adverse
  prices. Essentially coordination problems
  overcome in Zambia cotton more successfully than
  in Tanzania, Mozambique and Zimbabwe (Poulton et
  al). This story carries insights into nature of
  coordination problems and how these may be
  overcome

6

• Commercial agric story horticulture tobacco
  migration from Zimbabwe evidence of more
  sustained success with latter than former story
  here is alluded to but not analysed
• For most rural households (despite cotton success
  which provides an income) issue is maize poverty
  trap for most rural households maize is
  primarily a subsistence crop, small surpluses
  disposed on weakly integrated and volatile
  markets. Key point here is that households desire
  fertiliser but cannot finance it from maize sales
  hence strong political pressure for fertiliser
  subsidy. In summary, we do nor have a viable
  business model for supporting staple food
  production in smallholder sector.

7

• So fertiliser subsidy story needs a more nuanced
  coverage
• Surprised at conclusion that rural land tenure is
  not an obstacle tomusing land as collateral
  (doubt that bankers would agree for small and
  emergent farmers)
• Discussion of micro-finance interesting core
  problem that rural microfinance less viable the
  further borrowers are from cities a difference
  with poor areas of South Asia where microfiance
  has worked well in urban areas and, e.g., India,
  urban rather than rural areas are key margings of
  expansion
• Odd to say that being landlocked not a problem
  for infrastructure development (difficulties with
  railways to coasts, getting private investment
  into infrastructure as in Maputo-Joburg
  corridor)

8

• Final comments rightly, paper stresses exchange
  rate appreciation. If we are in a commodity
  super-cycle this may be a persistent feature so
• Maybe Zambias strategy of promoting
  non-traditional agric exports is challlenged
• Look for growth in supply of local non-agric
  services, plus agriculture focussing on better
  feeding the national population (with some
  spillovers to neighbours espec DRCongo)
• Need to look beyond WB literature.