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11. State of Financial Cooperatives in Zambia: A viable option for increasing financial inclusion?

Author:
Tamara Billima-Mulenga, Felix Mwenge, and Gibson Masumbu
Publication Date:
04-2019
Content Type:
Policy Brief
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
This policy brief presents the summary findings of a study on Promoting Financial Cooperatives (FCs)in Zambia that was conducted between 2017 and 2018 with financial support from the Rural Finance Expansion Program (RUFEP), Ministry of Commerce Trade and Industry (MCTI) and the Zambia Center for Accountancy Studies (ZCAS). The study used both qualitative and quantitative approaches which included a situational analysis of FCs in Zambia, a study tour to Kenya and a Census of FCs in eight provinces. The main objective of the study was to contribute to the development of FCs in Zambia by generating information on their performance. The secondary objectives of the study were to: 1. Undertake a situational analysis to develop a clear understanding of the landscape for the FCs in Zambia in terms of the regulatory framework, support institutions and the nature and level at which the FCs operate. 2. Undertake a Census of FCs to understand the opportunities and constraining factors for the growth of the Cooperatives movement in Zambia. It was envisaged that the study would provide evidence about FCs that could be used in the revision of the Cooperatives Act currently underway, aid MCTI understand the nature of Cooperatives and devise strategies for monitoring FCs. The study also aimed at providing information about the state of FCs that can be used for various purposes by the apex body of FCs and stakeholders such as the Bank of Zambia.
Topic:
Governance, Economy, Trade, and Financial Cooperatives
Political Geography:
Africa and Zambia

12. Large-Scale Farms and Smallholders: Evidence from Zambia

Author:
Jann Lay, Kerstin Nolte, and Kacana Sipangule
Publication Date:
02-2018
Content Type:
Policy Brief
Institution:
German Institute of Global and Area Studies
Abstract:
In light of the surge in large‐scale farms in developing countries, concerns have been raised that smallholders may be negatively affected. There is, however, very little evidence beyond case studies to support these claims. Drawing on nationally representative house‐ hold data sets and an inventory of large‐scale farms in Zambia, this study investigates the relationship between large‐scale farms and smallholders. First, we analyse the geograph‐ical contexts of wards that host large‐scale farms and show that large‐scale farms are found in wards with good infrastructure and soil quality. Second, we adopt a difference‐ in‐differences approach to estimate the impacts of large‐scale farms on smallholders’ area cultivated, maize yields, and access to fertiliser. We find that smallholders in wards with large‐scale farms increase their area cultivated and maize yields, but have lower fertiliser usage. This hints at positive spillovers at the extensive and intensive margins but not at improved access to agricultural inputs. It is likely that these results are also driven by the emergence of medium‐scale farms in these regions.
Topic:
International Political Economy and International Affairs
Political Geography:
Zambia

13. Investment Challenges in Zambia’s Electricity Supply Industry: A Cursory Assessment

Author:
Mwanda Phiri and Francis Ziba
Publication Date:
05-2018
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
During the tide of economic liberalisation in the 1990s, Zambia’s electricity market was liberalised with the aim of stimulating private sector participation. More than 20 years after market liberalisation, the power crisis in 2015 revealed that the industry had failed to attract the envisaged private sector investment required to expand and diversify energy generation sources and meet the increasing demand for electricity over the years. It became apparent that the various reforms taken to liberalise the industry, increase private sector participation and promote competition had fallen short of meeting these objectives. Zambia’s electricity supply industry still remained a semblance of a monopoly dominated by one large vertically integrated state-owned corporation responsible for the generation, transmission, distribution and supply of electricity. Given the important role of electricity in driving economic growth, this paper illuminates the barriers to entry in the ESI and the factors limiting competition. Drawing mainly on secondary sources, the study finds that at the very start, limited access to finance for energy projects potentially prevents the commencement of energy projects. Exacerbating the entry barriers are the below-cost electricity tariffs, the monopoly power held by ZESCO and its vertical integration and an inadequate regulatory framework to promote competition and prevent undue political interference. These findings justify the partial unbundling of ZESCO and the provision of legal reforms that support policy consistency, multi-year tariff adjustments and open and nondiscriminatory access to the transmission and distribution grids.
Topic:
Energy Policy, Regulation, Neoliberalism, Tariffs, and Electricity
Political Geography:
Africa and Zambia

14. Reversing Zambia’s high risk of debt distress

Author:
Florence Banda-Muleya and Shebo Nalishebo
Publication Date:
08-2018
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
A load of unsustainable debt hangs heavy over Zambia. Zambia is part of a list of 25 low income countries considered at high risk of debt distress in 2018. Government’s efforts to reduce the country’s infrastructure gap as well as bring down poverty and inequality have resulted into large spending overruns, a growing subsidy bill and a substantial public sector wage bill over the last five years. Alas, domestic revenues remained low and stagnant. So Government resorted to massive external borrowing to finance arguably unsustainable expenditure. This approach to spending pushed borrowings to about 59% of GDP as at end of 2017, which is in the territory of unsustainable debt levels. In October 2017, the IMF issued a red flag that Zambia was at high risk of debt distress, implying that the country was likely to breach the thresholds for debt and debt service indicators and, should it continue on the same trajectory, it would likely default on its debt service obligations.
Topic:
Debt, Poverty, Economy, and Public Debt
Political Geography:
Africa and Zambia

15. “Blanket” Fuel and Electricity Subsidies Did Not Offer Much Benefit to Zambia’s Poor

Author:
Caesar Cheelo and Rabecca Haatongo-Masenke
Publication Date:
10-2018
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
For a long time the Zambian Government ran a number of consumption and production subsidy programmes. These programmes1 came under considerable strain in 2015 when Zambia experienced a significant economic downturn. In that year, the real Gross Domestic Product (GDP) growth rate fell to 2.9%, from an impressive 7.7% over the ten years before (2005-2014). By the time the 2015 downturn had fully set in, the country was running a budget deficit of nearly 10% of GDP and had raked up a public debt stock of over 50% of GDP (IMF, 2016). With the combined cost of debt service interest payments and arrear payments rising from 17% of the National Budget in 2016 to 23% in 2017 (Cheelo, 2017), the Government was readily hemorrhaging money in the aftermath of the minicrisis. Zambia could no longer afford the multiplicity of subsidies it had been maintaining and seriously contemplated abolishing some of them. The policy intentions of the Government were met with strong anti-abolition sentiments with some stakeholders asserting that the removal of subsidies on fuel and electricity would cause pump-price and electricity tariff escalations. The worry was that these price hikes would hurt Zambia’s poor and vulnerable groups most of all. Generally, these sentiments were not backed by analysis and empirical evidence; they were subjective and had the potential to misinform public policy. This paper offers an alternative perspective to the above motion on anti-abolition of subsidies. We argue that during their existence, the fuel and electricity subsidies had benefitted the poor far less than they had done any other social groups in Zambia. Likewise, the abolition of the subsidies affected the poor less than it did other social groups.
Topic:
Energy Policy, Electricity, Fossil Fuels, and Subsidies
Political Geography:
Africa and Zambia

16. Rental Taxation: Curbing Non-Compliance and Improving Administration

Author:
Florence B. Muleya, Shebo Nalishebo, Malindi Msoni, Mukuka Mulenga, Evaristo Mwale, and Yenda Shamabobo
Publication Date:
10-2018
Content Type:
Working Paper
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
Since 2013, the Zambian economy has grappled with a high fiscal deficit. Many stakeholders continue to implore the Government to take measures to ensure that the tax base is broadened, voluntary compliance improved and domestic resource mobilisation enhanced to reduce the deficit. Consequently, there has been a call on the tax administration authority to rethink its tax collection strategies and bring more individuals and firms into the tax net. Recently, the Government reiterated its commitment to enhance resource mobilisation in the 2019 Budget Speech. Improved administration of taxation in the housing sector, particularly rental properties, offers a promise as one of the options to increase tax revenues especially if more tax payers are captured under this tax net. However, the administration of individual rental income tax faces many challenges.
Topic:
Economy, Tax Systems, and Rent
Political Geography:
Africa and Zambia

17. Financing the Economic Stabilization and Growth Programme (Zambia Plus) in the Shadow of the IMF

Author:
Caesar Cheelo
Publication Date:
04-2018
Content Type:
Working Paper
Institution:
Hudson Institute
Abstract:
In February 2018, the IMF reaffirmed its August 2017 formal withdrawal from negotiations with Zambia over a package of financial support. The strong position to hold negotiations came in the IMF’s Article IV Consultations report of 2017, which concluded that Zambia was at high risk of debt distress, and that whilst financial management and fiscal discipline were improving, the extent of the improvement was not sufficient to mitigate the growing public debt and fiscal deficit. Whilst the IMF deal may be off the table for the time being, the many of problems that drove Zambia to engage the IMF most assuredly remain unresolved. Two to three years after the economic minicrisis of 2015, Zambia continued to accrue sizable new debts, to utilize the proceeds poorly (to fund consumption spending) and to run persistent fiscal deficits – albeit a smaller and seemingly better managed deficit in 2017 compared to 2015 and 2016. These issues remain problematic despite the partial economic rebound, with high copper prices, good rains (leading to good harvests and more reliable power supply), and a stable Kwacha providing a strong platform for improvement. Nonetheless, fiscal performance is lagging behind and Zambia may be missing a window to reestablish prudent public financial management.
Topic:
Infrastructure, Governance, Reform, Macroeconomics, IMF, and Public Debt
Political Geography:
Africa and Zambia

18. Are Interest Payments on Debt Derailing Fiscal Consolidation?

Author:
Shebo Nalishebo and Florence Banda-Muleya
Publication Date:
06-2018
Content Type:
Policy Brief
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
This policy brief provides a review of the performance of the first quarter of the 2018 National Budget. The paper provides context by looking at both the revenue and expenditure trends during the last three years when Government instituted some fiscal adjustment measures to bring the country back to a path of fiscal fitness. In analysing the 2018 Budget, the first quarter preliminary outturns are compared to the approved Budget for 2018, the projected performance for the first quarter as well as the first quarter of 2017. We assess fiscal fitness over the last three years and determine that fiscal consolidation had begun. While fiscal performance was generally high, budget credibility and sustainability were low. In the first quarter of 2018, revenues were higher than planned and most expenditures were within the projected amounts. Nonetheless, interest payments were much higher than expected and are likely to be a major source of spending overruns in 2018.
Topic:
Debt, Government, Budget, Public Debt, and Revenue Management
Political Geography:
Africa and Zambia

19. China-Zambia Relations

Author:
Caesar Cheelo and Pamela Nakamba-Kabaso
Publication Date:
09-2017
Content Type:
Policy Brief
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
At a glance, China and Zambia – just like China and Africa – are strikingly different in many ways. They followed markedly different paths to development. They achieved significantly divergent trade and development results. However, they also have many striking commonalities, including a shared long history of developmental cooperation and relations. But, what are the lessons of China-Zambia relations for Zambia’s developmental goals and aspirations, including those in the Vision 2030?
Topic:
International Relations
Political Geography:
China and Zambia

20. The Expansion of Regional Supermarket Chains: Implications for local suppliers in Zambia

Author:
Francis Ziba and Mwanda Phiri
Publication Date:
03-2017
Content Type:
Working Paper
Institution:
Zambia Institute for Policy Analysis and Research (ZIPAR)
Abstract:
The last two decades have seen rapid economic growth in Zambia and the proliferation of foreign supermarket chain stores. However, this growth has translated into neither significant job creation nor significant poverty reduction. Furthermore, while the expansion of supermarket chains in Zambia has continued, local processing firms’ participation in supermarket value chains remains limited. This paper assesses the hindrances to local processing firms’ participation in supermarket value chains and how those firms’ participation might stimulate growth through regional trade. Our results show that local processing firms’ participation in regional supermarket value chains is constrained by a number of factors that pose either strategic or structural barriers to entry.
Topic:
Economic growth, Private Sector, Retail, Regional Economy, and Value Chains
Political Geography:
Africa and Zambia