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1、 2022,United NationsThis work is available through open access,by complying with the Creative Commons licence created for intergovernmental organizations,at http:/creativecommons.org/licenses/by/3.0/igo/.The designations employed and the presentation of material on any map in this work do not imply

2、the expression of any opinion whatsoever on the part of the United Nations concerning the legal status of any country,territory,city or area or of its authorities,or concerning the delimitation of its frontiers or boundaries.Photocopies and reproductions of excerpts are allowed with proper credits.T

3、his publication has not been formally edited.United Nations publication issued by the United Nations Conference on Trade and Development.UNCTAD/ALDC/2022/5eISBN:978-92-1-001967-5iiiNational Productive Capacities Gap Assessment ZAMBIAUNCTAD has long been advancing conceptual and analytical frameworks

4、 on productive capacities centred policies and strategies,as well as international support measures(ISMS)in favour of the most vulnerable and weaker economies.UNCTAD has also developed a global multidimensional Productive Capacities Index(PCI)and has been assisting member States with National Produc

5、tive Capacities Gap Assessments(NPCGAs).These offer unique insights into the performance of the economies of structurally weak and vulnerable economies based on the PCI,empirical research and the countries development visions and plans.They help in the identification of each countrys comparative adv

6、antages and binding constraints to economic development,as well as mapping intervention strategies.This NPCGA for Zambia was prepared,under the overall guidance of Paul Akiwumi,Director,Division for Africa,Least Developed Countries and Special Programmes of UNCTAD,by a team led by Mussie Delelegn,Of

7、ficer-in-Charge,Productive Capacities and Sustainable Development Branch,consisting of Andrzej Bolesta(Economic Affairs Officer),Sonia Bouali(Individual Contractor),Berklee Morganto(Individual Contractor),Johanna Silvander(Programme Management Officer)and Benedetta Simonini(Intern),as well as Moritz

8、 Meier-Ewert,Economic Affairs Officer,Trade and Poverty Branch.Substantive comments were provided by Lisa Borgatti,Junior Davis,Stefanie Garry,Patrick Osakwe and Rolf Traeger.Chukwuka Onyekwena provided consultancy services and prepared scooping background study.Secretarial and administrative suppor

9、t to the publication was provided by Evelyn Benitez,Regina Ledesma and Paulette Lacroix.The cover design was developed by Magali Studer,graphics and desktop publishing were done by Rostand Ngadjie Siani.ACKNOWLEDGEMENTSvNational Productive Capacities Gap Assessment ZAMBIAAcknowledgements.iiiFigures.

10、viExecutive summary.viiI.Introduction.11.1 Why do Productive Capacities matter for Zambias development?.21.2 An overview of Zambias economy:Challenges,opportunities,and prospects for graduation with momentum.31.3 Progress towards graduation from the LDC category and the challenges ahead.5II.National

11、 Productive Capacities Gap Assessment through the PCI.92.1 Overview of Zambias PCI scores in the last two decades.102.2 Analysis of the PCI by category and the assessment of binding constraints.112.2.1 Structural change.112.2.2 Natural capital.152.2.3 Human capital.172.2.4 Energy.202.2.5 Information

12、 and communication technologies.222.2.6 Transport.242.2.7 Private sector.272.2.8 Institutions.29III.The Way Forward:Policy Conclusions and Recommendations.333.1 Policies and strategies at the national level.343.2 International support and global partnerships.41ANNEX:A.Policy Sequencing Summary Actio

13、n Table for Productive CapacitiesSupport Processes.44 B.PCI Category-level Measures Summary Action Table.45CONTENTSviNational Productive Capacities Gap Assessment ZAMBIAFigure 1.Manufacturing value added as a share of GDP(per cent).Figure 2.Zambias PCI change incomparison.Figure 3.Zambias PCI in com

14、parison.Figure 4.Performance and change of Zambias PCI across eight categories.Figure 5.Structural change.Figure 6.Change in structural transformation indicators.Figure 7.Natural capital.Figure 8.Human capital.Figure 9.Energy.Figure 10.Information and Communication Technologies.Figure 11.Transport.F

15、igure 12.Private sector.Figure 13.Institutions.410 1011 121315182022252729FiguresviiNational Productive Capacities Gap Assessment ZAMBIAZambia belongs to the least developed countries(LDCs)and landlocked developing countries(LLDCs)groups.The country has made modest socioeconomic progress in some are

16、as,but still exhibits many of the challenges afflicting LDCs in general.Zambias economy remains significantly dependent on the mining and export of copper.The high dependence on extractives has left the economy vulnerable to fluctuations in the copper price for most of its post-colonial history,and

17、highly exposed to external shocks such as the COVID-19 pandemic.Zambias economy is furthermore characterized by weak productive capacities and lack of structural economic transformation.UNCTAD prepares National Productive Capacities Gap Assessments(NPCGA)to provide support to graduating LDCs followi

18、ng the inclusion of the Productive Capacities Index(PCI)in the graduation monitoring process by the UN Committee for Development Policy(CDP)1 and UN General Assembly resolutions requesting UN entities to provide support to graduating LDCs in view of developing their smooth transition strategies2.The

19、 PCI provides the statistical foundations for NPCGA analyses,relying on eight categories3 to measure different elements of productive capacities.The PCI together with a closer examination of micro and macroeconomic fundamentals of the country as well as an assessment of visions and development plans

20、 form the basis of the NPCGA for Zambia.The NPCGA closely examines Zambias socioeconomic challenges,opportunities,and prospects.It identifies comparative advantages of the country and key binding constraints to socioeconomic development.It recommends a series of pragmatic and forward-looking policy

21、actions at domestic level together with international support measures(ISMs)aimed at fostering productive capacities and achieving structural economic transformation.The ultimate objective of NPCGA is to enable Zambia to graduate with momentum from the LDC category and to realize its ambition to bec

22、ome a prosperous middle-income nation by 2030.Executive summaryNational Productive Capacities Gap Assessment ZAMBIANational Productive Capacities Gap Assessment ZAMBIA2National Productive Capacities Gap Assessment ZAMBIA1.1 Why do Productive Capacities matter for Zambias development?The concept of p

23、roductive capacities was developed by the United Nations Conference on Trade and Development(UNCTAD)in 2006 and is broadly defined as the productive resources,entrepreneurial capabilities and production linkages that together determine a countrys ability to produce goods and services that will help

24、it grow and develop.Productive resources refer to natural and human resources as well as financial and physical capital.Entrepreneurial capabilities encompass both core and technological competencies.Finally,production linkages include information exchange,resource flows and backwards and forward li

25、nkages along the whole value chain.These interrelated elements together make up a countrys productive capacities which enable inclusive economic growth and development.1 Addressing the phenomenon of“jobless growth”:The need for the concept arose following the experience of the jobless growth of the

26、early 2000s when many least developed countries(LDCs),including Zambia,experienced rapid growth that did not translate into job creation,significant poverty reduction and overall socioeconomic progress.The same growth spurt also did not enable most developing countries to diversify exports,enhance c

27、apital accumulation,and foster economy-wide productive capacities and structural transformation.Many of them remain dependent on exports of a small number of primary commodities,rendering them vulnerable to external shocks such as the COVID-19 pandemic.Moreover,growth has often been limited to the n

28、atural resources sector,leading to increases in inequality,limited employment opportunities for the growing youth population,and lack of progress in human development.The quest for sustained and inclusive growth for graduation with momentum:Building the basis for sustainable and inclusive growth in

29、LDCs requires them to foster economy-wide productive capacities.This enables to kick-start the process of structural transformation which conceptually refers to the movement of factors of production from lower to higher value-added activities and sectors.This in turn enables the diversification of t

30、he economy,reducing overdependence on primary commodities exports,and building resilience to shocks.Without fostering productive capacities,it is unlikely that many LDCs will be able to sustainably graduate and achieve the SDGs by the 2030 target year.This also applies to Zambia,which has met two of

31、 the three graduation criteria in 2021.1.See:https:/unctad.org/system/files/official-document/ldc2006_en.pdf.3National Productive Capacities Gap Assessment ZAMBIABreaking the lower-middle income trap and building economic resilience:Economic diversification is key not only for staving off the impact

32、 of negative external shocks but also to help countries break low-and middle-income traps.For Zambia to ensure that it achieves graduation with momentum and avoids the“middle income trap”it should,therefore,focus its development priorities on building productive capacities by addressing gaps and lim

33、itations identified in the present National Productive Capacities Gap Assessment(NPCGA).To operationalize the concept of productive capacities in the context of development policies,UNCTAD developed the Productive Capacities Index(PCI),which relies on eight categories2 to measure different elements

34、of productive capacities.The PCI together with a birds eye view of micro and macroeconomic fundamentals of the country form the basis of the NPCGA for Zambia.The NPCGA closely examines Zambias socioeconomic challenges,opportunities,and prospects.It identifies comparative advantages of the country an

35、d key binding constraints to socioeconomic development.It recommends a series of policy actions at domestic level together with international support measures(ISMs)aimed at fostering productive capacities and achieving structural economic transformation.The ultimate objective of NPCGA is to support

36、Zambias sustainable graduation from the LDC category and to realize its ambition to become a prosperous middle-income nation by 2030.3 The NPCGA and its policy recommendations should,therefore,be carefully considered in the formulation and implementation of domestic policies and in the design of ISM

37、s in favour of Zambia.1.2 An overview of Zambias economy:Challenges,opportunities,and prospects for graduation with momentumZambia is an LDC which has made modest socioeconomic progress in some areas,but still exhibits many of the challenges afflicting LDCs.The Zambian economy remains significantly

38、dependent on the mining and export of copper,with ores and metals accounting for 71%of its exports in 2019.Zambias copper mining contributes more than 2%to global production.The country is Africas largest producer of copper and cobalt,and globally the seventh largest copper producer and the third la

39、rgest producer of cobalt.4 It is home to Africas largest known copper reserves,which account for 6%of the worlds reserves.The high dependence on extractives has left the economy vulnerable to fluctuations in the price for most of its post-colonial history.The COVID-19 pandemic in 2020 caused the pri

40、ce of copper to fall sharply,leading to a significant loss in export revenue for Zambia and 2.The eight categories of the PCI include natural capital,human capital,energy,ICT,structural transformation,transport,private sector,and institutions.These categories are in turn benchmarked through the use

41、of 46 indicators.Details on PCI are available at:https:/unctad.org/topic/least-developed-countries/productive-capacities-index3.Republic of Zambia:“Vision 2030”,December 2006(available at:https:/www.nor.gov.zm/?wpfb_dl=444.UNCTAD,2021.Facilitating the Participation of Landlocked Developing Countries

42、 in Commodity Value Chains available at:https:/www.sdgfund.org/facilitating-participation-land-locked-developing-countries-commodity-value-chains4National Productive Capacities Gap Assessment ZAMBIAprecipitating the countrys default on its external debt in November 2020.Moreover,like many of its LDC

43、-peers,Zambias agriculture sector consists largely of smallholder farmers cultivating staple crops and suffering from low productivity.5 In 2019,the sector accounted for 49.6%of employment,6 but only 3%of the countrys Gross Domestic Product(GDP),down from 9%in 2010.7A further challenge facing Zambia

44、 relates to premature deindustrialization.The largest shares of GDP and employment in Zambias economy originate from the jobs sector which is characterised by informality and low-skills jobs,followed by industry.However,manufacturing value-added(MVA)as percentage of GDP has continued to decline(Figu

45、re 1).What is more worrying is that the decline in Zambias MVA is faster than the contraction seen in LDCs,LLDCs and sub-Saharan Africa(SSA).This is despite the fact that Zambia has important manufacturing sectors such as wood and paper products(at a combined 30%of total production),chemicals,rubber

46、s and plastics(at 28%),and food,beverages and tobacco(at 18%).8 Some of these are higher value-added sectors(e.g.chemicals)which have export potential that can be harnessed through targeted policies.9.5 9.1 9,6 10.1 10.1 9.8 9.4 8.7 8.5 8.7 7.6 7.5 7.1 6.0 6.8 7.5 7.7 8.1 6.8 4 5 6 7 8 9 10 11 12 13

47、 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Manufacturing value added(%GDP)LLDCs Sub-Saharan Africa LDCs Zambia Figure 1 Manufacturing value added as a share of GDP(per cent)!Figure 1:Manufacturing value added as a share of GDP(per cent)Source:Worl

48、d Development Indicators,World Bank 2022The precipitous decline in Zambias manufacturing value added in GDP shows the challenges facing the country in kick-starting structural transformation,value addition and economic diversification through industrialization.Zambia holds potential in labour-intens

49、ive manufacturing such as agri-food,leather and leather products.Yet,Zambias industrialization is further hindered by a weak energy sector where the dominant hydropower infrastructure does not 5.US Foreign Agricultural Service United States Embassy in South Africa.2015.Zambia Agricultural Economic F

50、act Sheet(available at:https:/apps.fas.usda.gov/newgainapi/api/report/downloadreportbyfi lename?fi lename=Agricultural%20Econom-ic%20Fact%20Sheet_Pretoria_Zambia_10-5-2015.pdf).6.World Bank.2021.Employment in agriculture(%of total em-ployment)(modelled ILO estimate)Zambia(available at:https:/data.wo

51、rldbank.org/indicator/SL.AGR.EMPL.ZS?locations=ZM)2018.7.World Bank.2019.World Development Indicators:Structure of output(available at:http:/wdi.worldbank.org/table/4.2).8.Central Statistical Office Zambia Data Portal.2017.Index of Industrial Production,January 2017(available at:https:/zambia.openda

52、taforafrica.org/oqqlgnf/index-of-industrial-production-january-2017).5National Productive Capacities Gap Assessment ZAMBIAmeet domestic needs,including those of industry.The mining sector alone accounts for 50%of domestic energy demand.In addition,the country struggles to provide access to electrici

53、ty for its population,especially in rural areas.Overall,only 43%of Zambians have access to electricity(2019).9 This also hinders progress in areas such as ICT and eCommerce development.As a landlocked country,Zambia also faces high transportation costs and weak export competitiveness,which are furth

54、er exacerbated by a limited transportation network and inefficient trade logistics.In 2018,the logistic performance index recorded a value of 2.5 for Zambia,in the middle of the performance scale.10 While Zambias performance dropped significantly in 2010,it has been on an increasing trend since,as o

55、f 2016 recovering its previous peak in 2007,surpassing sub-Saharan African average and reaching the level of lower middle income countries average.To address the issue of limited transportation networks,the National Transport Policy of the Republic of Zambia aims at creating an intermodal transport

56、system that would provide for interlinkages among the four modes of transport(rail,road,air and water)and ultimately transform Zambia into a regional transport hub.11 Moreover,there is a high prevalence of micro,small and medium enterprises in the economy with informality being common,especially amo

57、ng young workers.In 2019,71.8%of those employed in Zambia worked in the informal sector.12 As a result,there is high underemployment and incidence of poverty with the country facing a higher aggregate level of labour underutilization than its Sub-Saharan neighbours.Weak and vulnerable growth and lac

58、k of economy-wide productive capacities have had a detrimental impact on Zambias poverty reduction efforts.In 2015,54.4%of the population was living below the national poverty line.People living in rural areas made up 76.6%of those living in poverty while 23.4%lived in urban areas.13 According to th

59、e World Bank,estimates,extreme poverty(US$1.90 per person per day)in the country increased from 43%in 1998 to 52%in 2002;and from 62%in 2006 to 65.8%in 2010,before declining again to 58.7%in 2015.The World Bank,that Zambia is one of the countries with the highest levels of poverty and inequality in

60、the world.1.3 Progress towards graduation from the LDC category and the chal-lenges aheadDespite high levels of poverty and inequality,Zambia has achieved some socioeconomic progress.Between 2000 and 2014,the annual real gross domestic product(GDP)growth rate averaged 6.8%,while slowing down to 3.1%

61、per annum between 2015 and 2019.14 Persistent drought,low 9.World Bank.2019.Access to Electricity(%of population)(available at:https:/data.worldbank.org/indicator/EG.ELC.ACCS.ZS).10.World Bank.2019.Logistics performance index:Quality of trade and transport-related infrastructure(1=low to 5=high)Zamb

62、ia(available at:https:/data.worldbank.org/indicator/LP.LPI.INFR.XQ?locations=ZM).11.National Transport Policy.2019.Republic of Zambia,Ministry of Transport and Commerce(available at:https:/www.moh.gov.zm/?wpfb_dl=4812.ILOStat.2021.Statistics on the informal economy,Zambia(based on 2019 Labour Force

63、Survey)(available at:https:/ilostat.ilo.org/topics/informality/).13.Republic of Zambia Central Statistical Office.2015.2015 Living Conditions Monitoring Survey Report.Available at:https:/rise.esmap.org/data/files/library/zambia/Documents/Clean%20Cooking/Zambia_LCMS%202015.pdf14.World Bank,2020.GDP g

64、rowth(annual%)Zambia(avail-able at:https:/data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?end=2020&locations=ZM&start=2014).6National Productive Capacities Gap Assessment ZAMBIAagricultural output and the fall in the global commodity price of copper have contributed to the decrease in the latest GDP

65、growth rate.Nevertheless,Zambia has succeeded in increasing its human capital score,including average health-adjusted life-expectancy in recent years.Consequently,Zambia met the criteria for graduation from the LDC category for the first time in February 2021 at the triennial review of the Committee

66、 for Development Policy(CDP).Graduation from the LDC category is determined by the progress of countries towards the threshold levels of at least two of the three criteria.15 Zambia has recorded a Gross National Income(GNI)above the threshold for graduation since 2012,and in 2019 its GNI per capita

67、was US$1,305 against the graduation threshold of US$1,222.Since 2002,Zambia has also demonstrated consistent improvement in the Human Asset Index(HAI)and crossed the threshold for graduation(66)in 2021 with a score of 67.1.16 In the Economic and Environmental Vulnerability Index(EVI)category,Zambias

68、 performance has remained at around 40,while the threshold for graduation is 32 or below.17 As Zambia is approaching graduation from the LDC category,it has to navigate a series of challenges.Zambias economy has been hit hard by the COVID-19 pandemic.In 2020,real GDP contracted by an estimated 4.9%.

69、18 Zambias services sector was hit hard as tourism was decimated worldwide by severely restricted international travel.A World Bank Survey of households in Zambia found that 71%of respondents in the tourism sector had experienced job losses.19 Moreover,capacity utilization in manufacturing firms fel

70、l from 70%in 2019 to 51%in 2020.More severe declines were observed in small and large firms compared to medium-sized firms.Exporting firms also had larger declines than non-exporters as did firms with top managers who were female.20 The COVID crisis arrived when Zambia was already struggling with un

71、sustainable external debt.Debt including arrears reached 78%of GDP at the end of 2018.After the pandemic hit,the situation deteriorated rapidly and in November of 2020 Zambia defaulted on its debt.21 This means that,although COVID-19 adversely impacted all countries and economies,the impact on the m

72、ost vulnerable and structurally weaker countries such as 15.The threshold of Gross national income per capita(of US$1222),Human Assets Index(66 or above)and Economic and Environmental Vulnerability index(32 or lower)during the 2021 review.16.UN Department of Economic and Social Affairs.2021.Least De

73、veloped Country Category:Zambia Profile(available at:https:/www.un.org/development/desa/dpad/least-developed-country-category-zambia.html).17.UN Department of Economic and Social Affairs.2021.LDC Data(available at:https:/www.un.org/development/desa/dpad/least-developed-country-category/ldc-data-retr

74、ieval.html).18.African Development Bank.2021.African Economic Outlook 2021(available at:https:/www.afdb.org/en/documents/african-economic-outlook-2021).19.World Bank.2020.Monitoring COVID-19 Impacts on Households in Zambia,Report No.1:Results from a high-frequency phone survey of households(availabl

75、e at:https:/openknowledge.worldbank.org/handle/10986/34459).20.UNCTAD.2021.COVID-19 and the Challenge of Developing Pro-ductive Capacities in Zambia(available at:https:/unctad.org/system/files/official-document/ser-rp-2021d6_en.pdf).21.Geopolitical Monitor.2020.Situation Report Zambia Becomes First

76、Post-COVID Debt Default(available at:https:/www.geopoliti- Productive Capacities Gap Assessment ZAMBIAZambia was devastating.The persistent vulnerability of LDCs is rooted in their weak productive capacities and the lack of structural transformation.Hence,post-COVID-19 development policies and strat

77、egies need to be designed to overcome these handicaps and systemic limitations.The following section provides an assessment of Zambias productive capacities gaps and limitations,using the Productive Capacities Index.9National Productive Capacities Gap Assessment ZAMBIA9National Productive Capacities

78、 Gap Assessment ZAMBIA10National Productive Capacities Gap Assessment ZAMBIA2.1 Overview of Zambias PCI scores in the last two decadesZambias performance in the PCI of UNCTAD was very low,with a score of 24.24 on the composite index in 2018.This score is on par with the median score for LDCs(24.04)b

79、ut lower than that of the LLDCs(26.09)in the same year two groups to which Zambia belongs.Moreover,it is below the African and worlds best by 13.15 and 26.27 points,respectively.Zambias relatively poor ranking is further reflected in its global position(162nd out of 193 coun-tries and economies)and

80、average continental position(25th).At current rates of improvement,it will take 37 years for Zambia to reach the average level of PCI performance seen in other developing countries.Figure 2:Zambias PCI change in comparison Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data a

81、re available at https:/pci.unctad.org.20.8 21.0 21.0 21.4 21.7 21.8 22.1 22.2 22.4 23.0 22.1 22.7 23.7 23.9 23.6 23.9 24.5 24.1 24.2 20 22 24 26 28 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 UNCTADs Productive Capacities Index LLDCs Sub-Saharan Afr

82、ica LDCs Zambia Africa Figure 3:Zambias PCI in comparison Source:Underlying data are available at https:/pci.unctad.org.50.5 37.4 32.1 24.0 29.2 23.3 Current position World best United States Africa best Mauritius World Median Africa Median LDC Africa best Lesotho LDC Africa Median 11National Produc

83、tive Capacities Gap Assessment ZAMBIAZambias performance in each of the eight categories over time can be seen in Figure 4,and it shows the characteristics of economies with high natural capital.In these economies,even robust economic growth does not always translate into job creation and poverty re

84、duction,rendering sustained and inclusive devel-opment more difficult to achieve.Figure 4:Performance and change of Zambias PCI across eight categoriesSource:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.0102030405060702000200220042006200

85、820102012201420162018Human capital Natural capital Private sector Institutions Energy Structural change Transport ICT Human capital Natural capital Private sector Institutions Energy Structural change Transport ICT 2.2 Analysis of the PCI by category and the assessment of binding constraints2.2.1 St

86、ructural change Zambias economy has shown some structural shifts over the years with industry and services sector contributing the lions share of the countrys GDP.This trend is consistent across countries of SSA where a historically dominant share of agriculture in GDP has been declining over time.T

87、he structural change category of the productive capacities has not been showing qualitative or structural transformation in their economies.Despite shifts in GDP composition,the structural change category of the African continent has consistently been low particularly when compared to the performanc

88、e of other developing continent and advanced developing countries.Within Africa,Zambias scores in structural change component show some volatility,but mostly the country has performed above its peers in the region and countries at similar stages of development for the period 2000-2018(Figure 5).12Na

89、tional Productive Capacities Gap Assessment ZAMBIAIndicator-level analysis for this category shows that Zambias gross fixed capital formation(GCFC)as a percentage of GDP decreased starting in 2003 and stayed at around 30%until increasing to around 47%in 2015.The industrial ratio of Zambia has also r

90、emained high,starting at 74.47 in 2000 and increasing to 93.03 in 2018.However,closer examination of the indicators reveals that the GFCF is largely driven by investments in the mining sector,whereas the industrial ratio of the country is due to the increasing servicification of Zambias economy.Con-

91、sequently,despite increases in GFCF and industrial ratio,Zambias manu-facturing value added in GDP has continued to decline(Figure 5).Thus,the total PCI value on structural transformation may be overstating the actual performance of Zambia in this area.Figure 5:Structural changeSource:UNCTAD(2021)ba

92、sed on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.13.4 13.6 13.9 14.2 14.7 14.5 14.0 14.2 14.8 15.3 14.8 14.4 14.9 15.4 15.0 15.3 15.1 15.2 15.2 10 12 14 16 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Stru

93、ctural change LLDCs Sub-Saharan Africa LDCs Zambia Africa Despite longstanding policy priorities to diversify exports,Figure 6 shows that the export concentration index is increasing.This suggests that Zambias dependence on copper is becoming more significant,not less.Additionally,the economic compl

94、exity index is decreasing,indicating that diversification strategies have not yielded more diverse and unique Zambian products.Zambias weak performance on the two important indicators show the lack of transformation in its economy.13National Productive Capacities Gap Assessment ZAMBIAFigure 6:Change

95、 in structural transformation indicators0.22 0.28 0.30 0.22 0.28 0.19 0.16 0.13 0.13 0.23 0.19 0.13 0.17 0.13 0.11 0.16 0.08 0.08 0.08 0.45 0.50 0.51 0.48 0.47 0.52 0.61 0.62 0.59 0.58 0.67 0.70 0.65 0.62 0.67 0.65 0.66 0.66 0.68 0,0 0.2 0.4 0.6 0.8 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

96、2010 2011 2012 2013 2014 2015 2016 2017 2018 Export Concentration Index Economic Complexity Index Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.Key binding constraints to structural changeThe most pervasive binding constraints to Z

97、ambias structural economic transformation are the lack of export diversification and value addition as well as the inability to increase economic complexity.Zambia has faced significant difficulties with economic diversification over the years,despite its longstanding prioritization in national poli

98、cies.This made the countrys economy dependent on extractive resources,rendering it vulnerable to shocks,and making growth less inclusive.The lack of diversification has also prevented Zambia from harnessing trade and investment opportunities from improved market access or bilateral investment agreem

99、ents with development and trade partners.Another constraint to Zambias transformation efforts relates to the countrys inability to take advantage of bilateral and regional investment and trade opportunities.In Zambia,seven bilateral investment treaties are currently in force while eight more have be

100、en signed but are not in force.These bilateral agreements often provide economic opportunities,which Zambia is unable to fully take advantage of,due to its lack of economic diversification and structural transformation.Harnessing these opportunities would require policies and measures to direct Fore

101、ign Direct Investment(FDI)to sectors outside of the mining sector and capture such resources in manufacturing and value addition.While Zambia has not finalized its Economic Partnership Agreement(EPA)negotiations with the EU,22 the Cotonou Agreement23(and soon its successor)24 provides the basis for

102、its trade and partnership 22.See:https:/ec.europa.eu/trade/policy/countries-and-re-gions/negotiations-and-agreements/#_on-hold.23.Partnership agreement 2000/483/EC between the mem-bers of the African,Caribbean and Pacific Group of States of the one part,and the European Community and its Member Stat

103、es,of the other part,signed in Cotonou on 23 June 2000(OJ L 317,15.12.2000,pp.3-353).24.Partnership Agreement between The European Union/The European Union and its Member States,of the one part,and Members of the Organisation of African,Caribbean and Pacific States,of the other part(negotiated and i

104、nitialed text,available at:https:/ec.europa.eu/international-partnerships/system/files/negotiated-agreement-text-initialled-by-eu-oacps-chief-negotiators-20210415_en.pdf14National Productive Capacities Gap Assessment ZAMBIArelations with the EU.As an LDC,Zambia benefits from duty free quota free mar

105、ket access under the EUs Everything But Arms(EBA)initiative.However,Zambia was only able to utilize 70.6%of the preferences available due to supply side constraints,25 as well as high trade costs for Zambian producers and non-trade barriers such as EU phytosanitary measures.By 2013,EU exports to Zam

106、bia had increased seven times from their 2003 level,while Zambias exports the EU declined from US$472 million to US$325.5 million in the same period.In 2020,Zambians exports to the EU amounted to approximately US$275 million while EU exports to Zambia reached US$310 million.26 Regional and global va

107、lue chains have grown considerably over the last few decades with some countries,notably East Asian economies,benefitting from integrating within them.Regional and global value chains offer opportunities for developing economies to acquire new technology and attract FDI,but they also involve challen

108、ges.Often,the highest value-added activities(e.g.research and development(R&D)activities)remain concentrated in the high-income home countries of trans-national corporations(TNC).Additionally,many TNCs import intermediate components to the countries that engage in creating the final product,limiting

109、 the possibilities for technological knowledge transfer and the establishment of full productive activities in host countries.In Zambia,regional demand has grown significantly on the back of FDI in the mining sector that has its value chain extending well beyond the countrys borders.Imports of minin

110、g capital equipment have been particularly high in Zambia,with more than US$600 million worth of imports annually between 2011 and 2014,largely originating from South Africa and increasingly from China.27 With a view to diversifying the economy and benefitting from regional integration opportunities

111、,ten value chains have been identified in the SADC agro-processing cluster where Zambia has potential for value chain enhancement,including soya,sugar,meat products,cassava,dairy products,fish,horticulture,wildlife,forestry and other foods and drinks.28 To ensure that FDI and participation in region

112、al and global value chains results in knowledge and technology transfer to Zambian firms,Zambia needs to put in place proactive policies to strengthen productive capacities,such as support to targeted high-value added sectors or processing steps,combined with economy-wide policies to strengthen educ

113、ation and technical skills,create an enabling environment for the private sector,build relevant infrastructure(e.g.irrigation for agricultural specializations,and electricity infrastructure for manufacturing),and build strong regulatory institutions.29 Further,one of 25.See:https:/gsp.unctad.org/uti

114、lization;reporter=918;partner=894.26.See:https:/webgate.ec.europa.eu/isdb_results/factsheets/country/details_zambia_en.pdf.27.UNCTAD,2021.TRANSFORMING SOUTHERN AFRICA Harnessing Regional Value Chains and Industrial Policy for Development(available at:https:/unctad.org/system/files/official-document/

115、gdsecidc2021d1_en.pdf).28.Ibid.29.UNCTAD.2015.Facilitating the Participation of Landlocked Developing Countries in Commodity Value Chains(available at:https:/unctad.org/system/files/official-document/aldc2015d2_en.pdf).15National Productive Capacities Gap Assessment ZAMBIA30.Text to n.26.Zambias mai

116、n policy measures to facilitate participation and upgrading in global value chains is to develop industrial parks and multi-facility economic zones.These zones are expected to have well-developed communications and transportation networks in order to overcome infrastructure bottlenecks,thus attracti

117、ng FDI that can spur industrial development.30 Zambia should also work to strengthen the backward and forward linkages between its key economic sectors on the one hand and domestic and FDI firms,on the other hand.2.2.2 Natural capitalAs is the case for most LDCs and LLDCs in Africa,the score on the

118、natural capital category of the PCI is relatively high for Zambia.However,after reaching a peak around 2009,the score has declined slightly to a level below Zambias peers in the region and at similar stages of development(Figure 7).The relative decline is the result of the collapse of the commoditie

119、s price during the 2008-2009 financial and economic crisis,as well as a reduction in the production of copper.Several mining companies cancelled their contractual obligations during the economic crisis of 2008-2009,leading to the closure of several mines in Zambia.Figure 7:Natural capital Source:Lin

120、es representing country groups represent the median of these groups-Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.Figure 7 Natural capital 50.9 51.5 51.4 52.8 54.9 55.9 58.1 58.1 57.3 57.9 60.0 59.4 57.6 57.3 57.0 56.8 56.8 56.9 56

121、.9 50 55 60 65 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Natural capital LLDCs Sub-Saharan Africa LDCs Zambia Africa With a score of 56.93 in 2018,Zambia ranks 32nd in Africa and 54th in the world in this category.The preponderate share of natural

122、 capital in the PCI indicates Zambias commodity dependence and exposure to risks and uncertainties.However,if fully and sustainably harnessed,high natural capital holds potential for improved productive capacities and structural 16National Productive Capacities Gap Assessment ZAMBIAtransformation.Fo

123、r instance,natural resources rent can boost investments in human capital formation and financing infrastructure,including energy and ICTs.For Zambia,most indicators in this category remained stable over time.The only one that exhibits volatility similar to the overall category is the total natural r

124、esources rent as a percentage of GDP.This reflects the dependence of Zambian natural capital on copper extraction and its related price fluctuations.It also suggests that policies regarding natural capital management have not taken into account more diverse sources of natural capital.For instance,ha

125、rnessing the potential in agriculture helps countries not only to reduce their vulnerability to shocks but also to kick start the process of structural transformation in sector.Key binding constraints to harness natural capitalThe key constraints to harnessing the potential of natural capital in Zam

126、bia relate to(i)the lack of incentives and supporting infrastructure in the agriculture sector;(ii)weak policy formulation and implementation;and(iii)low productivity of factors of production such as labour.Zambia enjoys ample land area that exhibits potential for agricultur-al production,but is not

127、 being used as farmland because of a lack of irriga-tion.The lack of progress in the development of agriculture and other sources of natural capital(e.g.aquaculture)also indicates a need for strengthened capacity-building in policy formulation and implementation.There is a further need to improve pr

128、oductivity in agriculture and mining,and to strengthen linkages with downstream industries,such as light industry processing,and agro-processing.Improvement in the business environment will have the greatest impact on micro,small and medium-sized enterprises(MSMEs).They are a major source of product

129、ivity growth and job creation,and a potential source of regional production networks.Additionally,resources could be devoted to the production of livestock and livestock related prod-ucts such as milk and leather.These products can obtain a higher price than other agricultural products such as maize

130、 which could improve overall productivity.31 Adoption of sustainable livestock management practices through pilot projects have shown promising results,including restoration of ecosystems,improved forage,enhanced carbon sequestration,increased soil fertility and water absorption,leading to healthier

131、 livestock and better productivity.32 31.UNCTAD.2016.Zambia Trade Policy Framework Harnessing the potential for trade and sustainable growth in Zambia(available at:https:/unctad.org/system/files/official-document/ditctncd2015d4_en.pdf).32.See:https:/www.solidaridadnetwork.org/story/sustain-able-live

132、stock-management-improves-livelihoods-and-land-scapes-in-zambia/17National Productive Capacities Gap Assessment ZAMBIAThe increasing demand for organic livestock particularly in developed economies creates opportunities for countries such as Zambia to supply to high-end markets.Carefully designed pu

133、blic policies are required as a greater transition towards organic agriculture is possible,helping to achieve important environmental and health benefits,33 and offer higher value products.Zambia has the largest wild collection and beekeeping areas in Africa and second largest in the world,34 with a

134、n endowment of 3.2 million hectares.The organic agricultural land takes up a total of 207 hectares at present.35 While the share of organic farming land is still very small,the trend is growing and wild land is available to facilitate the expansion.Currently,the main organic products cultivated(wild

135、 harvesting:honey,mushrooms,indigenous tree seed oil;commercial:export vegetables,herbs,spices,medical plants,groundnuts,sesame,green manures,soy beans and maize)are destined to the European market.36 However,irrespective of the available land,its administration is often complicated,with a most area

136、s falling under customary arrangements.37 This requires specific attention to be paid to womens access to land,including adoption of effective measures to facilitate lowly represented groups right to acquire and control this asset.Building linkages to the local tourism industry can further strengthe

137、n demand for local agricultural products.There is also a need to further reform the Farmer Income Support Pack(FISP)System to improve the targeting,and better align incentives for farmers.Zambia also has unexploited mineral resources potential that has been well documented,but not conclusively linke

138、d to industrial processes yet.Industrial minerals and materials can reduce the over-dependence on base metal mining and help to create jobs.Necessary resources and institutions for related R&D should be put in place to sustainably harness Zambias other industrial minerals potential beyond copper and

139、 cobalt.38 In the process,linkages to the local economy need to be carefully considered and contractually affirmed to avoid a plateau-type of foreign investment that is typical of extractives sector.2.2.3 Human capital Although Zambias performance in the human capital component of the PCI was low ar

140、ound 2007,since then improvement has been steady,reaching within 0.3 points of the median performance of Africa by 2018(Figure 8).Between 2000 and 2018,Zambias score for the human capital component 33.Barbieri et al.2021.Global option space for organic ag-riculture is delimited by nitrogen availabil

141、ity(Springer Nature,nature food).34.After Finland.35.FAO,2021.The World of Organic Agriculture 2021(available at:https:/www.fibl.org/fileadmin/documents/shop/1150-orga-nic-world-2021.pdf 36.International Trade Centre.2021.Country Profile Zambia(available at:https:/intracen.org/our-work/countries-and

142、-re-gions/africa/zambia 37.See:https:/sustainabledevelopment.un.org/content/documents/dsd/dsd_aofw_ni/ni_pdfs/NationalReports/zambia/Land.pdf38.Kolala&Dokowe.2021.Economic potential of industrial minerals in Zambia-A review(available at:https:/ 18National Productive Capacities Gap Assessment ZAMBIAi

143、ncreased by about 35%.Health adjusted life expectancy shows a steady increase,expected years of schooling have remained stable at around 12.5 years,and the fertility rate has decreased slightly.The indicators for R&D professionals per million people and for R&D expenditure as a percentage of GDP are

144、 both affected by sparse data.This performance reflects the positive effects of the investment that Zambia has made in the health and education of its people.Between 2001 and 2015,central government budgetary expenditure in education was an average of 3.24%of GDP and expenditure in health was an ave

145、rage of 5.14%of GDP,reaching almost the SSA averages for government expenditure in both categories.39 This has also led to the improved HAI(Human Assets Index)of Zambia,which enabled the country to meet the graduation criteria at the 2021 review of the CDP.With a score of 38.75 in 2018 Zambia ranks

146、27th in Africa and 162nd in the world in this category.The performance of Zambia in the indicator of expected years of schooling is high but sparse data makes it unclear if this is impacting R&D the way it has the potential to.Despite the high performance of Zambia in human capital category of the P

147、CI,its performance in key indicators with huge impact on structural transformation such as the share of R&D personnel,number of scientists and technical experts are still low.The situation requires putting in place the right mix of policies and strategies discussed in section three of the NPCGA.The

148、human capital component of productive capacities is particularly crucial,as it allows for important linkages to other aspects of productive capacities.Figure 8:Human capital Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.28.8 28.7 2

149、9.4 30.9 30.9 31.8 31.5 31.0 32.0 32.8 33.5 34.3 35.6 36.3 37.0 37.6 38.0 38.4 38.7 25 30 35 40 45 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Human Capital LLDCs Sub-Saharan Africa LDCs Zambia Africa 39.World Bank,2015.Government expenditure on edu

150、cation(%GDP)Zambia(available at:https:/data.worldbank.org/indicator/SE.XPD.TOTL.GD.ZS?end=2015&locations=ZM&start=2000.19National Productive Capacities Gap Assessment ZAMBIASome of the ways those linkages are realized is through R&D,as well as employment.For example,underutilization of the labour fo

151、rce can impede the application of skills to public and private sector activities.Lack of R&D reduces opportunities for higher value-added production or local adaptation of products.Key binding constraints to human capital formationWhile Zambia has achieved improvements in the human capital component

152、 of productive capacities,further progress is held back by a number of constraints.These are:(i)low quality of education;(ii)labour underutilization;and(iii)challenges in increasing the proportion of researchers and technicians.Zambia has maintained the average expected years of schooling,but the qu

153、ality of education continues to be a challenge.According to UNICEF,the countrys targets have not yet been met.For instance,the target of an average score of 40%in language and mathematics was not reached in either Grade 5 or Grade 9.The share of children passing the Grade 9 and Grade 12 examinations

154、 continues to be low,at 55.3%and 64.8%respectively,with girls achievements falling behind that of boys.40 Zambia also has higher rates of labour underutilization than both the lower-middle income country group and the sub-Saharan African region.41 In rural areas,time-related underemployment is more

155、prevalent while in urban areas restricted access to the labour force is more of a problem.42 This suggests that different policies are needed to absorb Zambian labour at its full capacity into activities in rural versus urban settings.For example,in rural settings,diversifying activities to include

156、agricultural extension services could create opportunities for people to fill time-related gaps while in urban settings,access to child-care or active labour market policies may be more impactful.Zambias human capital indicators in R&D remain weak.The government has recognized the importance of supp

157、orting R&D professionals and activities and has dedicated a particular development outcome to it in the Seventh National Development Plan.43 However,in the first year of implementation,many of the concrete goals enumerated under this pillar had not been met.More progress in supporting technology rel

158、ated R&D for energy and transport would help create the positive feedback cycle that is so integral to holistic structural transformation and productive capacities development.40.UNICEF.2019.Zambia(available at:https:/www.unicef.org/zambia/education41.ILOstat.2020.Labour underutilization indicators

159、LU1,LU2,LU3&LU4 ILO Modelled Estimates%annual(available at:https:/www.ilo.org/shinyapps/bulkexplorer18/?lang=en&seg-ment=indicator&id=LUU_2LU4_SEX_AGE_RT_A).42.ILO.2020.World Employment and Social Outlook-Trends 2020(available at:https:/www.ilo.org/global/research/glob-al-reports/weso/2020/lang-en/i

160、ndex.htm43.Ministry of Development Planning.2017.Seventh National Development Plan 2017-2021(available at:https:/www.mcti.gov.zm/?wpfb_dl=3420National Productive Capacities Gap Assessment ZAMBIA2.2.4 Energy Zambias performance in the energy component is low compared to countries in the region and ot

161、her countries at similar stages of development(Figure 9).It also experiences some volatility over time mainly due to increases in transmission and distribution losses as a percentage of primary supply.Bottlenecks such as growing government debt,continued market-based reforms,and the creditworthiness

162、 of energy offtakers have also been identified.44 Figure 9:Energy Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.19.0 19.1 19.0 19.1 19.2 19.0 18.9 17.3 15.7 16.6 16.7 15.7 19.0 18.9 18.0 18.0 18.0 18.0 18.0 12 14 16 18 20 22 24 200

163、0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Energy LLDCs Sub-Saharan Africa LDCs Zambia Africa 44.USAID.2018.Power Africa Zambia Country Factsheet(available at:https:/www.usaid.gov/sites/default/files/documents/1860/Zambia_-_November_2018_Country_Fact_

164、Sheet.pdf).45.UNCTAD.2017.The Least Developed Countries Report 2017:Transformational Energy Access(available at:https:/ 29.18%of the population in Zambia had access to electricity in 2018,and this was the result of slow,but steady improvement from 16.70%in 2000.Like in many other LDCs,there is a wid

165、e inequality of energy services in rural and urban areas in Zambia.45 This reflects the countrys struggle to connect most of its population to electricity but suggests that progress,however slow,has been made.Key binding constraints to the energy sector developmentZambia faces a number of constraint

166、s in the energy sector.These are:(i)excessive reliance on hydropower,(ii)inadequate inter-agency coordination,(iii)gaps in rural electrification,and(iv)issues in achieving appropriate energy pricing.21National Productive Capacities Gap Assessment ZAMBIAHydropower accounted for 85%of installed capaci

167、ty in Zambia in 201946.In the context of climate change,this has become a vulnerability as increasingly unpredictable rainfall frequency and volume can affect the energy supply.Zambia has the potential to generate all the energy it needs,however with its current infrastructure and exploitation of en

168、ergy sources the sector has not been able to keep up with demand.Zambia experienced electricity supply rationing to all consumers in 2015 when demand stood at 1,949 Mega Watt(MW)and the sector was only able to produce 1,281 MW.47 Demand for energy is also increasing in Zambia at an average of 6%annu

169、ally.The largest consumer of electricity at 51.1%is the mining sector.48 Additionally,upgrading the mining sector to higher value-added activities is an energy intensive endevour requiring reliable energy availability.49 With rising electricity demand and insufficiency of energy generated through hy

170、droelectric dams in recent years,Zambia decided to enhance electricity generation through fossil sources(coal,diesel,and heavy fuel oil).As demand grows,pressure for increasing capacity through fossil channels mounts.Greener and less costly win-win solutions to address these issues would be to incre

171、ase mines energy efficiency and/or to adopt self-generation through renewable sources such as solar energy.Such measures by companies could be supported by public policies to provide an additional impetus.50 Technologies are available for mines to reduce their electricity consumption,environmental i

172、mpact and cost.51 Development partners have a key role to play in facilitating access to new technologies to improve energy efficiency for the benefit of environment and productive capacities development.Taking advantage of the significant potential in renewables other than hydropower,such as solar

173、and wind energy,can help diversify the energy supply,increasing resilience and capacity.The share of installed capacity attributed to solar energy increased to 3%in 2019.52 There is potential to increase variable renewable energy sources(wind and solar)installed capacity to 34%in mid-and long-term s

174、cenarios exploiting interconnections and power trading on the competitive market.Zambias energy sector is regulated by the Energy Regulation Board(ERB)although many other government entities are involved in its decision making.However,collaboration across agencies is limited,leading to a lengthy lic

175、ensing process and increased costs for private sector investors.The Rural Electrification Authority was established in 2003 to provide energy 46.RES4Africa Foundation&the Enel Foundation.2019.Integration of Variable Renewable Energy Sources in the National Electric System of Zambia(available at:http

176、s:/ to n 42.48.Ministry of Energy.2019.National Energy Policy 2019 49.UNIDO.2020.Zambia Industrial Diagnostic Study 2020(available at:https:/www.unido.org/sites/default/files/files/2020-10/PCP Zambia_Industrial%20Diagnostic Study 2020.pdf50.International Institute for Sustainable Development(IISD),2

177、018.Not a Case of Either/Or:How government and mines in Zambia can save money through energy efficiency(available at:https:/www.iisd.org/articles/zambia-mines-energy).51.ABB.Technologies to reduce energy consumption and emissions in mining operations(available at:https:/ Regulation Board.2019.Energy

178、 Sector Report(available at:https:/www.erb.org.zm/wp-content/uploads/files/esr2019.pdf).22National Productive Capacities Gap Assessment ZAMBIAinfrastructure in rural areas but it struggles with inadequate funding,lack of participation of the private sector and the lack of a mechanism to coordinate p

179、layers in rural electrification specifically off-grid providers.There has been little improvement in rural electrification,with only 4.4%of rural household connected to the grid in 2019 and 7.4%connected to solar home systems.53 Solar-based mini-grids can be a helpful development in electricificatio

180、n of rural areas as long as they are accompanied by appropriate planning such as consistent technical standards and protocols for grid interconnection.This is essential to allow them to eventually be integrated into larger networks,promoting transformational energy access.54 Zambia also has some of

181、the lowest energy tariffs in the region so low that they are not cost reflective.This impedes private sector investment.A revision of the tariff scheme was undertaken in 2019.These changes,as well as changes to the legal framework of the ERB,are expected to improve conditions for private investment

182、and allow for more effective oversight of the development of the sector.55 2.2.5 Information and Communication TechnologiesFor the ICT component,a positive trend can be observed in Zambia even though the scores are below the sub-Saharan African and continental African median(Figure 10).The trend sho

183、ws improvement at a pace similar to that of comparable countries.53.Text to n 47.54.Text to n 44.55.Text to n 47.Figure 10:Information and Communication Technologies Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.2.9 2.9 2.9 3.0 3.1

184、 3.2 3.4 3.6 3.8 4.0 4.4 4.9 5.4 5.4 5.6 5.8 6.1 6.2 6,6 2 3 4 5 6 7 8 9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 ICT LLDCs Sub-Saharan Africa LDCs Zambia Africa 23National Productive Capacities Gap Assessment ZAMBIAZambias score of 6.58 places i

185、t at a rank of 25th in Africa and 161st in the world.This relatively better ranking in Africa reflects the challenges of ICT development on the continent.Zambias improvements in this category have been driven by the increased number of mobile subscriptions per 100 people as well as a slightly slower

186、 increase in the number of internet users as a percentage of the population.Other indicators such as the number of fixed broadband subscriptions per 100 people,the number of fixed lines per 100 people and the number of secure internet servers per million in population have all improved but at a rela

187、tively slow rate.Key binding constraints to the ICT sectors developmentThe key constraints to progress in the ICT category of productive capacities in Zambia are:(i)insufficient electricity access;(ii)lack of ICT skills;and(iii)lack of infrastructure needed to foster e-commerce.Zambias progress on I

188、CT continues to be held back by lack of reliable elec-tricity access.While the country has made a lot of progress in laying fiber-optic lines,data connectivity is relatively unreliable because of fiber cuts,electricity grid failure and maintenance issues.A 2018 national survey on the access and usag

189、e of ICTs indicated a link between ICT access and access to electricity.The uneven distribution of energy between rural and urban areas is a binding constraint in the widespread adoption of ICT solutions throughout the country.There is a pronounced lack of ICT skills throughout the population in Zam

190、bia.In a survey conducted in 2018,over 70%of individuals stated that their main reason for not accessing the internet was a lack of knowledge about how to use it.56 At the national level,only 6.8%of individuals reported that they knew how to use a computer.This skill gap also has a gender dimension

191、with many more men possessing the skills to access and use computers and the internet than women.Furthermore,the digital gap between rural and urban areas is significant:while 14.7%of urban households own a computer,only 2.7%of rural households possess such ICT hardware.Similarly,while 11.8%of indiv

192、iduals in urban areas know how to use a computer,only 2.8%of rural habitants do.The lack of digital skills development in Zambia is related to the quality of education.The results from the Human capital category show that Zambians are expected to have 12.5 years of schooling,but that the quality of

193、education is low and participation rates drop soon after primary level.This 56.Zambia Information and Communications Technology Authority(ZICTA).2018.2018 National Survey on Access and Usage of Information and Communication Technologies by households and individuals in Zambia(available at:https:/ Pr

194、oductive Capacities Gap Assessment ZAMBIAsuggests that to reach the most people,ICT skills need to be integrated into the curriculum in primary school.However,the quality of instruction can be constrained by connectivity issues and limited digital infrastructure in schools.57 In Zambia,61%of primary

195、 schools and 17%of secondary schools do not have access to electricity.ICT skills among teachers can also be a constraint to the effective integration of ICT in an educational context.To respond to this knowledge gap,the UNESCO ICT Competence Framework for Teachers has been adapted to the Zambian co

196、ntext to create a framework for ICT skills development of educators.However,this adaptation has not yet been implemented in a sustained way.58 In the context of technical and vocational educational policies and programmes,ICT skills are a clear priority.But there is also a need to strengthen the lin

197、k between digital skills and entrepreneurship skills.The use of ICT for eCommerce is taking off.There is a high adoption rate of digital financial services,mostly for sending and receiving money.59 Other important sectors for eCommerce development in Zambia are food delivery services and tourism rel

198、ated services such as transportation(taxi apps).However,one logistical constraint in these services is that many residences in Zambia do not have formal addresses.Since 2014,the Zambia Information and Communications Technology Authority(ZICTA)has implemented a physical addressing programme that has

199、installed more than 60,000 street names and house number signs.The programme was planned to be continued from 2019 to 2023,but as of 2018 the funding for that period was not secured.60 2.2.6 Transport In the transport category Zambia has mostly performed below its peers at similar stages of developm

200、ent and others in the region since a dip in performance in 2010(Figure 11).At 11.59,Zambias score in this category rank it at 33rd in Africa and 170th in the world.The changes in Zambias transport score reflect the performance of the indicator of kilometers roads per 100 sq.kilometers of land.57.ILO

201、.2021.Digitalization in Teaching and Education in the United Republic of Tanzania(available at:https:/www.ilo.org/wcmsp5/groups/public/-ed_dialogue/-sector/documents/publication/wcms_783673.pdf).58.UNESCO.2018.UNESCO ICT Competency Framework for Teachers(available at:https:/unesdoc.unesco.org/ark:/4

202、8223/pf0000265721)59.Zambia Information and Communications Technology Authority(ZICTA),2018.2018 National Survey on Access and Usage of Information and Communication Technologies by households and individuals in Zambia(available at:https:/ of Zambia Rapid eTrade Readi-ness Assessment(available at:ht

203、tps:/unctad.org/system/files/official-document/dtlstict2018d10_en.pdf).25National Productive Capacities Gap Assessment ZAMBIAFigure 11:Transport Source:UNCTAD(2021)based on the Productive Capacities Index.Underlying data are available at https:/pci.unctad.org.11.4 12.0 11.7 11.7 11.7 11.7 11.7 12.1

204、12.7 13.6 9.7 11.1 11.1 11.2 11.2 11.5 14.1 11.6 11.6 8 10 12 14 16 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Transport Figure 11 Transport LLDCs Sub-Saharan Africa LDCs Zambia Africa 61.7th NDP Implementation Plan 2017-2021(https:/zambia.unfpa.or

205、g/sites/default/files/pub-pdf/Final%207NDP%20Implementation%20Plan%20-%209%20April_2018.pdf).Most transport in Zambia,both freight and passenger transport,happens by road.To respond to this need,the Seventh National Development Plan has achieved solid progress with its plan to improve Zambias road s

206、ystem.In 2018,168 km of road was surfaced which exceeded the 146 km target.Significant progress was also made in the expansion and modernization of Kenneth Kaunda International Airport Terminal and the new Copperbelt International Airport.61 Both of these developments should lead to improvements in

207、Zambias performance in their related indicators.However,the improvements are not substantial in relation to the data sets and measurements used to assess this category of the PCI.For example,road density per 100 square kilometers and air-passengers as percentage of population undermine the overall p

208、erformance.While the first indicator requires a huge jump,the growth rate in the second one needs to surpass the growth rate in population.Otherwise,modest improvements cannot be duly captured in the scores of the category.Zambias data for roads per 100 square kilometers is also affected by sparse d

209、ata.Key binding constraints to the transport sector developmentZambia faces three principal constraints on the development of the transport category of productive capacities:(i)high fuel prices;(ii)outdated rail infrastructure,and(iii)inadequate trade facilitation measures.Following the removal of s

210、ubsidies in 2013,fuel prices in Zambia are among 26National Productive Capacities Gap Assessment ZAMBIAthe highest in the region,second only to South Africa.Because all of Zambias petroleum is imported,the price of fuel is sensitive to fluctuations in the international price and the exchange rate of

211、 the Zambian kwacha.This has led to interest in using biofuels for the Zambian transport sector.So far,the sector is still underdeveloped.To address the situation,the Ministry of Energy and the Ministry of Finance have established a Biofuels Technical Committee that will implement a National Biofuel

212、s Program.62 One area of transport that has fallen behind is the countrys rail infrastructure.Existing rail lines do not allow for trains to move fast enough to meet the needs of freight customers.The average train speed is 40km per hour which is much slower than road transport.Infrastructure that s

213、upports trains that can move at least 80km per hour will be needed for the rail sector to be competitive with road transport.63 One way to improve the competitiveness of the rail sector in Zambia is to break up the sector by separating infrastructure development from maintenance and service operatio

214、ns.This“unbundling”of rail transport activities can facilitate private sector participation through equipment and track leasing,infrastructure construction and maintenance and the private operations of trains.Public-private partnerships can also be a helpful way to gain financing for this sector giv

215、en Zambias constrained fiscal space.64 Regional agreements such as the Southern African Development Community(SADC)and the African Continental Free Trade Area(AfCFTA)encourage creating more harmonized and comprehensive rail networks in Africa for both passenger and freight.This prioritization means

216、that there is the political will for the movement of goods and services to be more streamlined within these areas along train routes.This can be an area where trade can be facilitated as infrastructure is updated.Zambia has implemented a series of trade facilitation initiatives to improve competitiv

217、eness.These include the establishment of one stop border posts(OSBP)that combine entry and exit procedures into a shared space for national border processing to reduce transit costs,while maintaining commitments to public safety and revenue collection.An OECD analysis of other measures of trade faci

218、litation found that Zambia performs well in information availability,involving the trade community,appeals procedures,and automated formalities.Areas that could be improved include internal border agency cooperation,governance and impartiality,and procedure and documentation formalities.62.Energy Re

219、gulation Board.2019.Energy Sector Report(available at:https:/www.erb.org.zm/wp-content/uploads/files/esr2019.pdf).63.Policy Monitoring and Research Centre.2019.Analysis of Zambia Railway Sector:Structural deficiencies and the way forward(available at:https:/ Productive Capacities Gap Assessment ZAMB

220、IADeveloping a coherent logistics strategy with the definition of a core logistics network and strengthening the logistic plan to integrate into potential regional supply chains is crucial to facilitate Zambias trade and increase the benefits derived from trade agreements.2.2.7 Private sectorThe mos

221、t worrying trend of Zambias PCI analysis is the evolution in its private sector category.Scores began on the low side compared to the region and countries in similar stages of development and continue decreasing(Figure 12).Zambias private sector development category score hit an all-time high in 200

222、7 at 64.76.By 2018 this category declined 15.7%from its 2007 peak.It is Zambias worst relative ranking in both Africa(51st)and the world(185th).An analysis of the indicators for this category show that all indicators are trending upwards,except two:the cost to import and export a container as well a

223、s access to finance.These indicators are driving the performance of the whole category down despite marked improvements in time to start a business and domestic credit to private sector as a percentage of GDP.Improvement in domestic credit in Zambia has not yet impacted the countrys bank lending int

224、erest rate,which stood at 9.5%in 2020 against 7%in Mauritius and 5.5%in Botswana in the same year.65 As in most countries in SSA,collateral requirements for private sector lending undermine access to credit.Figure 12:Private sector Source:UNCTAD(2021)based on the Productive Capacities Index.Underlyi

225、ng data are available at https:/pci.unctad.org.64.6 64.6 64.5 64.5 64.6 64.6 64.6 64.8 63.0 62.9 56.5 56.7 56,4 56.9 54.7 54.8 54.6 54.6 54.6 50 55 60 65 70 75 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Private sector LLDCs Sub-Saharan Africa LDCs

226、Zambia Africa 65.World Bank Data on Lending Interest Rates28National Productive Capacities Gap Assessment ZAMBIAKey binding constraints to private sector developmentThe key binding constraints to Zambias performance in the private sector category are:(i)rising transport costs for container trade;(ii

227、)access to finance;(iii)inability to foster linkages;and(iv)a large informal sector.A key challenge to Zambias private sector development are the rising costs to export and Import a container.Zambias landlocked position creates a binding constraint on how much these costs can be brought down,thus ra

228、ising operational costs for private sector actors.However,a number of ongoing and needed improvements have been discussed in the transport category.Notably,some logistical reforms have been undertaken to face such issues.Significant time and cost savings have been,for instance,achieved through the e

229、stablishment of a one-stop border post in Chirundu at the Zambia-Zimbabwe border.Adoption of an e-Government solution(a non-invasive inspection scanner for pre-clearance)has reduced the average time spent by a truck at the border from seven-nine days to about three-four hours,as well as a sevenfold

230、increase in the number of trucks passing through the border.The private sector saved an average of US$20 million per month as a result of these improvements.This is thanks to shorter passage times,as well as a more than 100%increase in trade tax collection on the Zambian side of Chirundu from an ave

231、rage of US$10 million a month in 2009 to US$20.3 million in 2012.Time saving has been valued at US$600,000 per day,and the benefit is shared widely by border actors but also producers and consumers.66 Another important constraint to private sector development is access to finance.Improving access to

232、 finance has been a policy priority for a long time in Zambia,and the PCI suggests that improvement is happening in a general sense.However,high collateral requirements and high interest rates make loans consistently more accessible to larger firms while excluding MSMEs.67 And the credit that is ava

233、ilable is prohibitively expensive with commercial banks reporting nominal interest rates up to 40%and microfinancing institutions reporting rates up to 70%.68 In addition,collateral requirements for financing are typically focused on fixed property such as land and buildings,even though many MSMEs d

234、o not have these kinds of immovable property to put up as collateral.The private sector in Zambia is also constrained by the lack of linkages between large firms and MSMEs,or between local firms and foreign investors.Fostering stronger linkages could strengthen the transfer of technologies and skill

235、s and create stronger incentives for formalization.66.OECD/WTO.2015.Aid for Trade at a Glance 2015:Re-ducing trade costs for inclusive,sustainable growth(available at:https:/www.wto.org/english/res_e/booksp_e/aid4trade15_chap5_e.pdf).67.UNIDO.2020.Industrial Diagnostic Study Zambia 2020(available at

236、:https:/www.unido.org/sites/default/files/files/2020-10/PCP%20Zambia_Industrial%20Diagnostic%20Study%202020.pdf).68.Ministry of Finance.2017.National Financial Inclusion Strat-egy 2017-2022(available at:https:/www.boz.zm/National-Fi-nancial-Inclusion-Strategy-2017-2022.pdf).29National Productive Cap

237、acities Gap Assessment ZAMBIAA further constraint relates to informality.Informal activity in Zambia is significant in every sector of the economy,with an estimated 72%of workers working informally.69 ILO studies affirm that the formality of an enterprise is also determined by the number of workers

238、in an enterprise:the smaller the enterprise,the more likely it is to employ informal workers.70 Informal economic activity can create a difficult competitive environment for formal sector firms because informal operations do not adhere to regulatory standards or pay taxes.Informal firms also tend to

239、 stay small and be less productive,limiting their ability to contribute to general productive capacities development.Therefore,the Zambian government should consider specific incentives for informal actors to formalize.2.2.8 InstitutionsOne category where Zambia performs well above its peers is in i

240、nstitutions(Figure 13).The peace and political stability of Zambia allow for a strong showing in this category.With a score of 47.44 in 2018,Zambia ranks 14th in Africa,its best position in Africa across all categories.However,this indicates the poor capacities of African countries in building stron

241、g institutions and not necessarily the strength of institutions in Zambia.On the worldwide level this score ranks 118th.Figure 13:InstitutionsSource:UNCTAD(2021)based on the Productive Capacities Index.44.6 44.1 43.6 45.2 44.4 43.0 45.5 47.2 48.3 47.1 46.8 48.6 50.8 50.2 49.1 49.3 47.5 47.3 47.4 30

242、35 40 45 50 55 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Institutions LLDCs Sub-Saharan Africa LDCs Zambia Africa 69.Text to n1270.Enterprises whose number of workers was between 1 to 4,had an exceedingly large number of workers employed in-formal

243、ly,whereas those whose number of workers was more than 4 had gradually employed fewer informal workers in ru-ral and urban areas alike.Specifically,enterprises with 1 to 4 workers had rates of informality of 99.4%in rural areas and 96.7%in urban areas.Those with 5 to 25 workers had rates of informal

244、ity of 94.7%and 68.4%in rural and urban areas,respectively.Enterprises with more than 24 workers had 58.3%of their workers being informally employed in rural and 37.2%in urban areas.(ILO.2018.Informality and pov-erty in Zambia,Findings from the 2015 Living Conditions and Monitoring Survey)available

245、at:https:/www.ilo.org/wcmsp5/groups/public/-africa/-ro-abidjan/-ilo-lusaka/docu-ments/publication/wcms_697953.pdf).30National Productive Capacities Gap Assessment ZAMBIAA breakdown of indicators reveals that the second highest indicator is voice and accountability.This is mirrored in the extensive c

246、onsultative processes that the government outlines in its various development initiatives.However,not all Zambian institutions are as good about this aspect.Export and import firms have struggled with the lack of transparency and ability to weigh in on changing trade regulations,although trade facil

247、itation initiatives have established more opportunities for consultations in recent years.71 There is also a lack of voice and accountability within Zambian financial institutions,particularly when it comes to financing for MSMEs.Both,the rule of law and control of corruption indicators have improve

248、d but are still negative.These have a knock-on effect on the two lowest indicators:regulatory quality and government effectiveness.All of these indicators interact in a synergistic way with the private sector.Foreign and domestic investors alike gain confidence from a level playing field and clear e

249、xpectations from governmental institutions.In Zambia,the domestic credit to private sector has been increasingly declining in the last years,recording 15.2%of GDP in 2020.72 Therefore,stagnant performance in Zambias private sector development category can be linked to low performance in institutions

250、.Although improvement is taking place in transparency,accountability and corruption in the public sector,scoring 2.5 in 2020,the scores for other indicators are low.73 As such,while Zambia performs well in the institutions component of the PCI compared to its African peers,the performance in many of

251、 the indicators still requires the attention of policy makers.Key binding constraints to the development of institutions The key constraints facing Zambias performance in this area are:(i)economic governance challenges;(ii)gaps in transparency and inter-Ministerial coordination;and(iii)administratio

252、n of land.Zambia ranks 117th out of 180 on Transparency Internationals Corruption Perceptions Index with a score of 33 out of 100(the average for Sub-Saharan Africa is 32).A strong legal framework,law enforcement branches and an independent and effective court system are necessary to address this pr

253、oblem.Another mechanism to counter corruption is the strengthening of auditing agencies and improving financial management.This includes closing international loopholes to impede the laundering and hiding of proceeds from looted state assets.74 71.Ministry of Commerce,Trade and Industry 2019.Multiye

254、ar Expert Meeting on transport,trade logistics and trade facilitation,Seventh session Zambias update on WTO Trade Facilitation Agreement Implementation.Available at:https:/unctad.org/system/files/non-official-document/cimem7p04_Kayula%20Siame_en.pdf72.World Bank,2020.Domestic credit to private secto

255、r(%of GDP)Zambia(available at:https:/data.worldbank.org/indica-tor/FS.AST.PRVT.GD.ZS?locations=ZM).73.World Bank.2020.CPIA transparency,accountability,and corruption in the public sector rating(1=low to 6=high)Zam-bia(available at:https:/data.worldbank.org/indicator/IQ.CPA.TRAN.XQ?locations=ZM).74.T

256、ransparency International.2016.How to Stop Corruption 5 Key Ingredients.Available at:https:/www.transparency.org/en/news/how-to-stop-corruption-5-key-ingredients31National Productive Capacities Gap Assessment ZAMBIAStrong institutions are particularly important in economies focused on the export of

257、mined materials.Zambia can draw useful policy lessons from the experiences of successful countries such as Botswana75 in fostering vibrant and dynamic institutions.Strong regulatory oversight and clear fiscal policies for foreign companies,particularly those operating in the export-oriented mining s

258、ector are needed to curb the threat of capital flight and illicit financial flows.76 Another important function of institutions for productive capacities development is enforcing respect for property rights and the rule of law.In Zambia,administration of land is often complicated,as 94%of land is un

259、der the legal authority of traditional chiefs,and access to land is particularly difficult for women as many cultural norms and practices in Zambia reject the idea that women can acquire and control land in their own right.The government has recognized the need for more effective land administration

260、 and drafted a new National Land Policy,which highlights facilitating land ownership for Zambians and regulating ownership for non-Zambians as well as promoting the inclusion of women,youth,people with disabilities,and other marginalized populations in the land market.The successful application of t

261、his policy will depend on effective collaboration between local and national institutions,and between national ministries.75.Botswana is an example of a mineral export dependent economy that has developed institutions to channel its natural wealth into productive capacities development.Botswana esta

262、blished a Public Service Debt Management Fund and a Revenue Stabilization Fund to save a substantial amount of revenue during boom cycles to cushion the economic blow of bust cycles.76.UNCTAD.2020.Economic Development in Africa Report:Tackling Illicit Financial Flows for Sustianable Development in A

263、frica.33National Productive Capacities Gap Assessment ZAMBIA33National Productive Capacities Gap Assessment ZAMBIA34National Productive Capacities Gap Assessment ZAMBIAZambias National Productive Capacities Gap Assessment(NPCGA)shows that the country lags behind developing countries in all measures

264、of the productive capacities,except natural capital category.The countrys overall performance in the composite PCI is slightly better than the average for LDCs.However,it is lower than Africas regional average and by far lower than the regions top performers.Zambias weak performance in energy(electr

265、icity),ICT,structural change,private sector,and transport categories is particularly worrying.The performance of Zambia in the PCI should be seriously taken in the as-sessment of the countrys progress towards graduation from the LDC cat-egory.Zambias progress thus far has been in two of the three gr

266、aduation criteria:GNI per capita and Human Assets Index(HAI).The biggest chal-lenge is to make progress towards the third LDC graduation criterion Eco-nomic and Environmental Vulnerability Index(EVI).Zambias lack of progress in EVI is the cause and consequence of its weak economy-wide productive cap

267、acities,lack of structural transformation and excessive socioeconomic vulnerability to negative external shocks.Addressing these complex chal-lenges calls for formulating and implementing“new generation”policies and strategies as well as revamping ISMs that place the fostering of productive capaciti

268、es and structural transformation at the centre.At the domestic lev-el,this requires reorienting policy interventions from traditional,short-term,and project-based towards holistic,long-term and“programme-based”ap-proaches to development.Such a paradigm shift should be complemented by new ISMs that i

269、nclude transfer of technology,building R&D institutions,rebalancing Official Development Assistance(ODA)resources between productive and economic sectors and expanding market access to val-ue-added exports in goods and services.New generation policies and ISMs are key to address persistent socioecon

270、omic vulnerability facing Zambia,make its eventual graduation from the LDC category irreversible and put the country on the path of inclusive growth and sustainable development.In this context,the following recommendations should be considered both by Zambias policymakers and its development and tra

271、de partners.Further proposed actions are contained in the matrix which forms an annex to the NPCGA.3.1 Policies and strategies at the national level 1.Prioritize productive capacities for structural transformation:Zambia needs to prioritize developing new productive capacities,while simultane-ously

272、utilizing and maintaining existing ones which should be carefully se-35National Productive Capacities Gap Assessment ZAMBIAquenced both in timeframe,prioritization,and resources allocation.That is,while the medium-to long-term priority should be to build new productive capacities,in the short term,t

273、he focus should be on how to maintain and uti-lize existing capacities.This also means that the countrys macroeconomic,industrial,agricultural and infrastructure policies should be geared towards the development of productive capacities and effective utilization of existing ones.For instance,Zambias

274、 above-average performance in natural and hu-man capital as well as institutions should enable the country to maintain and effectively harness them for developing new capacities and capabilities by focusing on sectors of comparative advantages as well as addressing gaps and limitations identified in

275、 the current NPCGA.For instance,better human capital and institutions are key to foster entrepreneurship,embrace ICTs in production and innovation as well as effectively harness natural capital.2.Harness the potential of natural capital:Zambia has comparative advantages(revealed and latent)in agricu

276、lture and mining sectors which can serve as a springboard for the countrys efforts to build productive capacities and kick-start structural transformation.Zambia needs to diversify agricultural production and carefully identify specific agricultural sub-sectors or products that can help to kick star

277、t agro-processing and foster forward and backward linkages between agriculture,agro-industry,and the services sectors of the country.Zambia could invest rents from extractive resources(mining)in improving agricultural productivity,enhancing integrated rural development,and maximizing the sectors emp

278、loyment intensity to absorb skilled and semi-skilled labour force.Supporting irrigation systems and enhancing rural infrastructure such as electrification are key in enhancing agricultural productivity and generating on-and off-farm employment opportunities in rural areas.Agriculture can also be a s

279、ource for raw materials that can be used in food processing and other labour intensive manufacturing,before being exported.Promoting linkages by facilitating the supply of local produce to restaurants and hotels by local small-scale producers can on the one hand help Zambia to provide an authentic c

280、ulinary experience and highlight the unique products that the country can offer and on the other hand provide new opportunities for MSMEs and structural transformation.Zambia should expand R&D and agriculture extension services,subsi-dizing agricultural production and productivity,enhancing the role

281、 of the pri-36National Productive Capacities Gap Assessment ZAMBIAvate sector as well as facilitating integration into regional and international markets as well as local,regional,and global value chains.The governance of agricultural global value chains can be buyer-driven,with large retailers plac

282、ing high demands on suppliers to meet stringent standards.Thus,en-hancing agricultural extension services and developing stronger certification and marketing services,including through the introduction of geographical indications,is essential to increase the value of Zambian products.Agri-cultural t

283、ransformation can be facilitated through increasing productivity by supporting further development of R&D tailored to the African context and enhanced public agricultural research capacity.Specifically,Zambia should establish partnerships with research institutes,academic,domestic,and foreign compan

284、ies to identify,develop,and promote potential products,from nutraceuticals to farming goods.Access of the poor and women to productive assets such as land and capital is vital for addressing poverty and inequality in the country as well as productivity in agriculture.Currently,access to land is part

285、icularly difficult for women as many cultural norms and practices in Zambia reject the idea that women can acquire,control and use land for production and investment purposes.To alleviate the over-dependence on base metal mining,Zambias unexploited industrial minerals and materials potential should

286、also be further explored,with resources allocated to R&D and other necessary facilities.In the process,linkages to the local economy need to be carefully considered and contractually affirmed to avoid plateau-type of investments that are typical of extractives sector.3.Strengthen human capital:Zambi

287、as human capital PCI score is better than the median for LDCs and SSA,reflecting progress in education and health resulting from targeted investment to social sectors.These also brought about the improvements in the Human Assets Index(HAI)of Zambia.However,there are serious gaps and limitations in t

288、his category as well that must be effectively addressed to further boost the human capital formation in Zambia.Addressing these requires improving the education sector by enhancing the quality of basic education,enhancing technical and vocational training and aligning it with labour market needs,fos

289、tering R&D facilities,and retaining local talent.Currently,there are high rates of labour underutilization and informal employment,especially among young workers.Skills training programmes and active labour market policies would be crucial to help young people integrate into decent jobs in the forma

290、l economy and build up their scientific,technical and research capabilities.37National Productive Capacities Gap Assessment ZAMBIA4.Boost employment and enhance labour productivity:It is critically im-portant for Zambia to enhance the employment intensity of growth.In this regard:Policymakers need t

291、o support the generation of jobs outside of the mining sector,particularly in labour-intensive production processes.Sectors such as agro-processing,as well as labour-intensive manufac-turing and services sectors have the potential to generate jobs,contribute to poverty reduction,enhance enterprise d

292、evelopment,and facilitate produc-tive transformation.With the aim to enhance employment opportunities linked to productive capacity development,there is a need to establish public private sector dialogue,as well as engage national(vocational and other)training and education providers in the joint ef

293、fort in view of meeting market demands with an appropriately trained labour force and aligning training offer to the needs of the priority sectors.5.Facilitate technological upgrading,conducive to legal and policy frame-works and linkages for the manufacturing sector:Zambias weak and declin-ing manu

294、facturing value added in GDP is a matter of concern and is a sign of premature deindustrialization of the country.In parallel with enhancing production and productivity of agriculture,Zambia needs to foster indus-trialization and technological upgrading to build productive capacities and accelerate

295、structural transformation.In this regard,it is vital for the Gov-ernment to formulate coherent industrial,trade and other sectoral policies with the aim to foster production linkages between economic sectors and between firmslarge and small,domestic and foreign.This should include the creation of an

296、 enabling environment for business,entrepreneurship,and investment.Governments provision of incentives for domestic firms needs to target firms that innovate and upgrade their productive capacities,create jobs,and expand linkages and productivity.6.Promote a mix of renewable energy sources to improv

297、e electricity supply,in particular in rural areas:Industrialization,particularly manufacturing,requires affordable and sustainable electricity supply.Zambias performance in the energy category of the productive capacities index is among the lowest even compared to African average performance.The cou

298、ntrys electricity sector development is particularly constrained by the lack of economic viability for extending the grid to remote areas and a mismatch between 38National Productive Capacities Gap Assessment ZAMBIAenergy generation capacity and demand.There are significant opportunities to address

299、these issues through installing a mix of variable renewable energy sources(hydro,solar,wind,geothermal).These can add significant capacity,and mini-grid options(hydro and solar)are innovative ways to bring electricity to rural areas.Regional integration will also contribute to more energy reliabilit

300、y,an important constraint on several other categories such as manufacturing and value adding,economic diversification,job creation,ICT and private sector development.7.Intensify support to private sector development as a priority:The performance of Zambia in the PCI shows glaring difficulties facing

301、 the private sector.Key challenges include the dominance micro-entreprises of informal,small and microenterprises;intermittent electricity,poor transport connectivity and logistics;and most importantly limited access to finance,especially due to high interest rates and collateral requirements by loc

302、al banks.Addressing these will require effective measures to strengthen infrastructure from enhancing road and ICT connectivity and improving electricity supply and cost,to ensuring greater access to credit and business development services.To address obstacles facing women entrepreneurs,a combinati

303、on of skills training and management training would be advisable,with links to finance,business development services,mentoring and incubators.Further,there should be greater facilitation of networking amongst trainers to ensure more coordination and relevance of training for women entrepreneurs.Rega

304、rding access to finance and resources,banks tend to be reluctant to give loans to MSMEs,and to women entrepreneurs in particular.There is a need to promote women friendly banks in Zambia.Moreover,banks should offer a broader choice of loan terms,collateral requirements,interest rates,and repayment t

305、erms to various groups of the MSME market,notably women entrepreneurs.8.Harness natural capital rents to promote structural change:Zambias relatively higher natural capital component in its PCI can have a transformational impact on the countrys economy if the rents are effectively harnessed for inve

306、stment in infrastructure,production transformation and value-addition.However,currently,the high natural capital component combined with other structural impediments discussed in the NPCGA,entrench dependence on export of primary commodities.These challenges are reflected in Zambias low structural c

307、hange category in PCI,declining manufacturing value added in GDP,and preponderate share of commodities in the countrys export earnings.39National Productive Capacities Gap Assessment ZAMBIATo address this,and in view of the increasing importance of the commodities sector in Zambias economy,policies

308、and strategies of the country should redefine long-term visions that link the commodity sector to its national development strategies.Further,Zambia can also kick-start the process of structural transformation in its services sector,which has become dominant in the country economy in terms of share

309、of GDP and employment.A shift from low-skill and low-technology services sector toward knowledge and skills intensive higher value services,such as financial services,insurance,ICT and manufacturing related services is critically important for structural transformation.Structural change and value ad

310、dition should be viewed as key to capital accumulation,development of new activities,employment,and further diversification of the economy away from traditional sectors,thereby intensifying structural transformation.9.Leverage domestic and foreign direct investment for transport infrastruc-ture deve

311、lopment:Over the years,Zambia has made a lot of progress in upgrading the countrys road infrastructure.However,transport cost contin-ues to be high in Zambia due both to its landlocked position and weak trade logistics as well as the high cost of fuel.There is significant opportunity to take more ad

312、vantage of rail networks,especially regionally although there are constraints related to the existing rail infrastructure and the organization of the rail sector in Zambia.Zambia needs to address its gap in transport in-frastructure financing by leveraging domestic and foreign direct investment,regi

313、onal infrastructure projects and through public private partnership(PPP).10.Invest in technology,know-how and innovation:Zambias application of technology and use of ICT is limited.ICT development is constrained by un-reliable energy supply and lack of ICT skills.Despite the challenges,the use of IC

314、Ts is improving but still low,especially in rural areas.E-payments are already widespread among mobile phone users,and there are programmes providing updated market prices on agricultural products to farmers.But there are further opportunities to develop e-commerce,which is currently mostly concentr

315、ated in urban centres such as Lusaka.Other areas that re-quire the intervention and facilitation of the Government of Zambia include fostering regional collaboration for technological learning,taking full advan-tage of regional integration opportunities,especially in R&D and ICT,and enhancing the fo

316、rmalization of its informal sector to facilitate“opportuni-ty-driven”entrepreneurship rather than“necessity-based”entrepreneurship.40National Productive Capacities Gap Assessment ZAMBIA11.Foster capital formation and promote investments(domestic and foreign):To support capital formation in Zambia,en

317、hancing public and private investment in productive sectors of the economy,capturing rents from natural capital in financing infrastructure,with a focus on energy and ICT,and improving access to finance for MSMEs and strategic manufacturing sectors are key areas that require urgent action.Fostering

318、linkages between FDI and domestic productive capacities development is also an important facet to be considered.Continued efforts are also needed to address the lag in R&D while continuously improving the human capital category of the country.In attracting FDI,the Government of Zambia needs to targe

319、t investments in sectors where Zambia has a comparative advantage(away from mining sectors)and negotiate the terms and conditions to facilitate transfer of technology and foster production linkages with the domestic private sector.For instance,joint venture arrangements can promote the integration o

320、f domestic firms into global value chains.Further strategies include incentives for domestic productive investments such as tax holidays in exchange for local procurement,technology transfer and R&D,as well as import tariff exemptions for machinery and inputs.These kinds of incentives should have a

321、sunset clause to avoid rent seeking.Supplier development incentives are another way to improve domestic production capabilities and foster linkages between foreign and domestic firms where incentives can target foreign investors and firms who actively facilitate transfer of technology,know-how among

322、 domestic suppliers,and add value to export products.12.Strengthen institutions with enhanced transparency and more effective use of new technologies:Zambia has demonstrated impressive results in in-stitutions category of the PCI,performing high especially when compared to sub-Saharan Africa and oth

323、er LDCs.This suggests that Zambia has better capacities to formulate and implement effective policies than most countries in SSA.However,economic mismanagement and unclarity(lack of trans-parency)around trade regulations,which create uncertainty for the private sector,remain problematic and require

324、further actions.As part of modernizing institutions and enhancing their operational efficiency,Zambia needs to embrace new technologies and modern trade logistics.For instance,trade facilitation efforts,when fully implemented,have the potential to address both issues,especially through the digitaliz

325、ation of customs data.41National Productive Capacities Gap Assessment ZAMBIAA lot of progress has been made with an e-Government strategy which is designed to increase transparency and decrease public sector costs,although this is constrained by the limited ICT penetration in rural areas due to infr

326、astructure and energy challenges.There is significant potential for government-to-government communication to be streamlined and improved.This would have positive impacts on the speed,cost,and effectiveness of interacting with public agencies for both firms and citizens.Zambia is encouraged to conti

327、nue its performance in the institutions category of the PCI by enhancing dialogue,collaboration,and communication between the private and public sectors as well as by improving institutional coordination through cross-departmental initiatives,joint performance targets,and better information sharing.

328、3.2 International support and global partnershipsNational policies and actions alone are not sufficient to effectively address challenges facing Zambia in fostering productive capacities and structural transformation.Global actions and policies are equally crucial for building productive capacities

329、and accelerating diversification and structural transformation.These should include facilitating FDI flows,bridging the digital and knowledge divide,providing financial resources including through ODA and debt relief,and realigning ISMs to the needs and priorities of Zambia.The following specific me

330、asures and actions can be undertaken at the international level in support of Zambias efforts to build productive capacities for achieving sustained and inclusive growth.These are also important to ensure a smooth transition of the country and make the graduation of Zambia from the LDC category irre

331、versible.1.The most significant and urgent help that the international community could offer Zambia in the immediate future is to address the countrys external debt burden including through debt cancellation and restructuring.Zambias debt is held by a diverse array of creditors,including private sec

332、tor actors and different countries which contributes to the challenge and complexity of reaching a comprehensive debt relief or restructuring deal.According to various sources,Zambia currently has around US$3 billion in outstanding Eurobonds and around the same amount is owed to China and Chinese en

333、tities.In this regard,creditor nations,international financial institutions,regional banks,as well as private sector creditors should take concrete measures to ease the countrys external debt burden and free resources to invest in productive sectors of the economy.42National Productive Capacities Gap Assessment ZAMBIA2.The international community can also assist Zambia in curbing illicit financial