Transcript What are constraints to inclusive growth in Zambia?

What are constraints to
inclusive growth in
Zambia?
Discussant’s comments
J G Kydd
• 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
• 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?
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
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
– 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.
– 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 MaputoJo’burg corridor)
Final comments: rightly, paper
stresses exchange rate
appreciation. If we are in a
commodity super-cycle this may
be a persistent feature so:
– Maybe Zambia’s 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.