Mining has been central to Zambia’s economy for almost a century. The Zambian economy has witnessed consistent growth ranging between 5 and 7 percent annually since 2004. This resurgence is largely attributed to increased mining investments and output, buoyed by favorable global copper prices. By 2011, Zambia had achieved lower-middle-income status, a distinction regained after losing it in the 1980s.
However, despite economic strides, Zambia faces numerous challenges. High poverty and inequality currently affect nearly two-thirds of the population living below the international poverty line. Even in mining areas experiencing growth, concerns arise regarding the sector’s impact on economic and social conditions. Efforts to improve economic management and governance have yielded mixed results. While areas like political stability have improved, regulatory quality has deteriorated. Zambia’s low ranking on the Open Budget Index suggests limited citizen access to information for holding the government accountable in public service delivery. Governance structures in Zambia, characterised by a centralised political-administrative system, contribute to this mixed performance. Fiscal decentralisation is limited, leaving district councils underfunded and lacking capacity for public service delivery. Public spending tends to prioritise recurrent expenditures over investments.
Long-term economic growth in Zambia is contingent on diversifying the economy away from its historical reliance on mining. Simultaneously, it involves enhancing the economic contribution of the mining sector while tackling inherent competitive challenges. To achieve this, careful attention must be paid to avoiding exchange rate overvaluation. Sustained investment in the industry is essential to developing enhanced capabilities within firms, enabling them to competitively produce sophisticated products and generate employment opportunities. Even a slight shift from imported to domestically produced goods as mining inputs can contribute significantly to industrialization.
Government-private sector partnerships are crucial for creating a conducive regulatory environment that promotes sustainable mining practices. By working together, stakeholders can develop and implement policies that balance the economic benefits of mining with environmental and social considerations. Transparent regulations and effective governance are essential for attracting foreign investment and ensuring the responsible exploitation of Zambia’s rich mineral resources. Collaboration between mining companies and local communities is integral to fostering social inclusivity and addressing the challenges associated with resource extraction. Through community engagement initiatives, companies can contribute to local development, provide employment opportunities, and invest in education and healthcare. Building strong partnerships with communities not only enhances the industry’s social licence to operate but also promotes shared prosperity.
Furthermore, international collaborations are key to leveraging global expertise, technology, and best practices in the mining sector. Partnerships with multinational companies and organisations enable Zambia to access advanced technologies, improve operational efficiency, and enhance the skills of the local workforce. These collaborations contribute to the overall competitiveness of the mining industry on the global stage. The development of infrastructure, such as roads and power supplies, is a shared responsibility that necessitates collaboration between the government and mining companies. Effective partnerships in infrastructure development not only support mining operations but also have spillover effects on other sectors, catalysing broader economic growth.
Support from the mining sector for economic growth and diversification extends beyond direct contributions to job creation. It involves indirect and induced job opportunities, along with initiatives for training and skill development. While direct employment in mining may be limited to a minority, the impact of indirect and induced employment on income and job opportunities can be substantial. Opportunities for skills development exist at both tertiary education levels, possibly through collaboration with foreign universities, and at the skilled artisan level to address existing skills deficits.
To cultivate a competitive, world-class mining industry, particular attention must be given to addressing challenges faced by several high-cost, low-productivity mines in the Copperbelt. Policymaking efforts should focus on reducing costs, improving productivity, managing taxation levels, and ensuring greater stability in the regulatory environment for the mining sector. These actions are pivotal for fostering a competitive industry that aligns with global standards.
