ZAM

Background

The Zambia Association of Manufacturers (ZAM) will be hosting its 9^th Annual Manufacturer’s Week in 2020, under the theme “Economic Recovery through Innovative Resilient Manufacturing ”.

The Manufacturer’s Week is an annual event that brings together various members of society  for purposes of promoting local Zambian manufacturing through active engagement of the manufacturers with key stakeholders such as policy makers in Government, other private sector, civil society organisations and the general public. The collaborative efforts are to support the growth of the manufacturing sector in Zambia.

Manufacturing and value addition are an important engine for growth and poverty reduction in any economy. In the recent past, Zambia’s manufacturing sector’s value added as a percentage of Gross Domestic Product (GDP) has steadily grown from about 7.6% in 2010 to 8.1% of GDP in 2018, in contrast to other key sectors whose contribution to GDP has been declining such as mining (12.8% – 10.7%) and agriculture (9.4% – 5.9%) in the same period^[1]. ZAM’s goal is to enhance the manufacturing sector’s contribution to more than 30% of GDP by 2030.

Growth in the manufacturing sector on the other hand, has been on a downward trajectory. Between 2011 and 2019, the highest growth rate was recorded at 10.6% in 2011 and lowest growth in 2016 at 1.9%. Over the nine-year period, the average growth rate was 5.2% of GDP. For Zambia’s manufacturing sector to attain contribution to GDP of over 30%, growth rates of above 7% per year, will be consistently required to ensure increased industrialisation and a vibrant manufacturing sector.

However, Zambia faced tough economic conditions in 2019 and manufacturing growth plunged to 2.4%, even though the sector had contributed 4% to GDP in the previous year 2018. Despite reduced growth in 2019, the manufacturing sector’s share of total employment stood at 8.1% of the total labour force[2] and was the third largest employer aside the Wholesale and Retail Sector and Agriculture. Manufacturing jobs were more decent as they were less informal.

In 2020, the manufacturing sector’s growth is likely to decline further, owing to the devastating effects of the Coronavirus Disease (COVID-19). In the first quarter, even before the effects of the pandemic hit hard, growth in the manufacturing sector was only 0.3% due to tough economic conditions experienced from 2019. Going into the second quarter, the effects of COVID-19 set on the sector which contracted to a negative growth of 4.3%[3], affecting Governments aspirations for economic diversification and job creation. With the International Monetary Fund (IMF) projecting a contraction of 5.1% for the Zambian economy in 2020, manufacturing sectors negative performance will largely contribute to this outcome.

Nonetheless, projections reveal the economy will recover to 0.6% in 2021. A robust manufacturing sector will play a key role in moving the economy towards recovery due to its strong backward and forward linkages with other sectors of the economy such as Agriculture, Mining, Construction, Tourism and the Wholesale and Retail Sector. Growth in the manufacturing sector is likely to foster broad-based economic recovery and speedy job creation. Hence, direct, joint, significant efforts towards supporting the growth and development of the manufacturing sector are required.

In addition to the benefits mentioned above, the manufacturing sector plays a strategic role in promoting both radical and incremental innovation. Innovation refers to creating value from knowledge through the provision of a new product to the market or a new way of producing a good or providing a service[4]. Innovation also entails organising production processes better. Innovation is risky and sometimes requires huge sunk costs. These aspects of innovation are likely to discourage many players in the economy to invest in and support innovation. Therefore, entrepreneurs in manufacturing take risks to change things and drive innovation.

Innovation has many benefits. Studies have recognised innovation as the engine of economic growth and provide evidence to show that in developing countries, like Zambia, innovation plays a pivotal role in fostering socioeconomic transformation and sustainable development. Innovation reduces the cost of production and at the same time fosters production of better and more competitive products. Innovation gives companies an upper hand in markets. Innovation also enables firms to penetrate export markets, which they may not otherwise penetrate. All these advantages tend to culminate in job creation and supporting economic development.

Recognizing the importance of innovation in economic development and the strategic role manufacturing plays in supporting innovation, this year’s Annual Manufacturer’s Week is centered on encouraging collaborative effort to support innovation in Zambia’s manufacturing sector. The 9^th edition of the Manufacturer’s Week seeks to explore innovation as a means of resilience, promoting efficient and environmentally friendly manufacturing, necessary for economic recovery.

The week will draw participation of policy makers, renowned international speakers, and Captains of Industry for objective dialogue on practical measures to support adoption of innovations in the manufacturing sector. As a means to promote more competitive innovative products and efficient production methods, the week will generate recommendations for policy reforms to spur innovation in Zambia’s manufacturing sector.