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Abstract
Zambia is one of the poorest countries in Sub-Saharan Africa. Almost three-quarters
of the population were considered poor at the start of the 1990s, with a vast
majority of these people concentrated in rural and remote areas. This extreme poverty
arose in spite of Zambia’s seemingly promising prospects following independence. To
better understand the failure of growth and poverty-reduction this paper first considers
the relationship between the structure of growth and Zambia’s evolving political
economy. A strong urban-bias has shaped the country’s growth path leading to a
economy both artificially and unsustainably distorted in favor of manufacturing and
mining at the expense of rural areas. For agriculture it was the maize-bias of public
policies that undermined export and growth potential within this sector.
A series of poverty profiles are developed and compared to the structure of
growth during the structural adjustment period. Substantial policy-changes led to rapidly
rising poverty, especially in urban areas. The costs of adjustment were particularly
pronounced given the big bang approach to reform. Concurrent trade liberalization and
privatization collapsed the formal sector with persistent macro-economic instability
undermining necessary private investment. Middle income urban households were
hardest hit, with more-educated workers moving into informal activities and the less-educated
migrating to rural areas. Agricultural liberalization prompted changes in the
structure of rural production, with a general shift away from maize towards export-crops
for medium-scale farmers and more sustainable staples crops for small-scale farmers.
While overall rural poverty increased during the 1990s, its depth has declined
considerably. Poor market access and low agricultural productivity were key constraints
facing small-scale and more remote rural households. The urban core of the economy
therefore collapsed under structural adjustment but agriculture and rural areas have
continued to grow. Since this growth has occurred at the lowest end of the income
distribution, there is some evidence of ‘pro-poor’ growth in Zambia under structural
adjustment despite national stagnation.
Sustained investment and economic growth during recent years suggest a possible
change of fortune for Zambia. In light of this renewed growth, the paper uses a dynamic
and spatially-disaggregated economy-wide model linked to a household survey to
examine the potential for future poverty-reduction. The findings indicate that the current
growth path, while positive, will be insufficient to substantially alleviate poverty. The
large increases in growth that would be required suggest that finding a more pro-poor
growth path should be a priority for public policy. The paper examines alternative
growth paths and finds that diversification through an agriculture-led development
strategy is likely to prove the most pro-poor. This is particularly pronounced for staples-led
growth, although this option is contingent on improving productivity and market
access, especially in remoter rural areas. Although agricultural growth is essential for
substantial poverty-reduction, the country’s large poor urban population necessitates
growth in non-agriculture. The findings suggest that returning to a copper-led growth
path is not pro-poor and that non-mining urban growth, although undermined by foreign
exchange shortages and inadequate private investment, is likely to be preferable for
reducing poverty.