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(DAIL MAIL) Zambia’s economic outlook dependent on diversity – World Bank

Zambia’s economic outlook dependent on diversity – World Bank
By NANCY MWAPE

ZAMBIA’s economic outlook is dependent on how new sectors of growth are identified says the World Bank.

World Bank country manager for Zambia, Kapil Kapoor said the country’s major problem is that, the economy is so vulnerable to international commodity price fluctuations due to the continued dependence on mining. This exposes the country to volatility.

Dr Kapoor said in an interview in Lusaka that economies that are so much dependent on one sector find it difficult to manage volatility.

“When prices increase for copper on the international market, your exchange rates strengthen and when prices fall, your exchange rate depreciates,” he said.

Dr Kapoor said businesses find it very difficult to operate in unstable environment where the exchange rate is volatile.

“There is need to find ways of reducing this volatility. Dependence on mining will continue to subject the country to volatility, Am not saying mining is not important, but I think it should be one element in the overall growth strategy of Zambia,” he said

Dr Kapoor hoped that over time, the mining sector will decline as a major part of the economy to allow other sectors to grow in importance.

He said the economic outlook for Zambia is not dependant on money released from donors citing the recent US$ 256.4 million provided by the International Monetary Fund (IMF).

He said the funds released by the IMF will help the Bank of Zambia to better manage its exchange rates and augment reserves.

“The world is in for a protracted economic crisis and it requires concerted action on the part of Government to make sure that the economy can be put on sustained fitting.

This goes beyond any kind of assistance that any donor can provide. US$200 million or US$ 500 million is a very small amount of resources that a country like Zambia needs in order to bridge the infrastructure gap,” he said.

Dr Kapoor said for energy sector alone, Zambia needs about US$ 5 billion of investment of which rural electrification will require about US$ 1 billion.
He said to grow the economy, there is need look at how agriculture, tourism and manufacturing can grow to diversify the economy.

“Zambia needs to exploit hydro potential, reduce the cost of doing business and get the manufacturing sector growing without assistance from the donor community like the World Bank, IMF or the other co-operating partners,” he said.

Labels: ECONOMIC DIVERSIFICATION, KAPIL KAPOOR, World Bank

posted by MrK @ 5:37 PM