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Zambia

Updated by Milimo Gastone Haaninga , Levy Chikuwah Hartlane on 21.04.2017

Over the past decade, Zambia has achieved macroeconomic stability and recoded sustained growth rate averaging 6.4 per cent per annum. Economic growth, however, has been mainly driven by capital intensive sectors in urban areas (mining, construction, and transport) and as a result there has been only a marginal decline in poverty.  Inequality is on the rise, with the divide between urban and rural areas widening. Disparities between urban and rural areas are largely undermining the capacity of the rural population to contribute to and benefit from the gains of economic growth.  In 2015, the headcount rates for overall and extreme poverty nationally remained high at 54.4 per cent and 40.8 per cent, not significantly different to 2010 levels, whilst the absolute numbers of people living below the poverty line were increasing with population growth (from 6 million in 1991 to 8.4 million in 2015).

The Gini Coefficient, as a measure of income inequality, increased from 0.60 in 2006 to 0.65 in 2010 and 0.69 in 2015. The increase is attributed to the widening divide between urban and rural areas. In 2015, the rural headcount poverty rate was 76.6 per cent, double the urban poverty rate of 23.4 per cent. Virtually no decrease in poverty rates was observed in rural areas between 2010 and 2015.

The poor continue facing challenges including food insecurity and inadequate access to basic services such as education, safe drinking water and healthcare. The most vulnerable include those living in poverty, women, children and the aged, people with disabilities, vulnerable migrants, refugees, internally displaced persons, and minorities. The urban – rural divide translates in unequal provision of basic services, with urban populations enjoying relatively better access to education, health, water and infrastructure. In contrast, poor rural households, already entrenched in extreme poverty and burdened with food insecurity, continue to have inadequate resilience to face health, climate and economic shocks and struggle to build human capacity through education or training. The consequence, for most, is a persistent failure to escape intergenerational poverty. In this context, the Zambian traditional family and community systems continue to face exceptionally high levels of demand and the support provided through these mechanisms is overall inadequate to meet basic needs for all households that face poverty and deprivation. The increasing rates of urbanization also put additional strain on the provision of social services in urban areas, exposing a larger group of urban poor to poverty and vulnerability.

Vulnerability also cuts across the whole of Zambian society due to the structure of the labour market. The high share of informal employment (89.3 per cent of the total employed population, according to the 2014 Labour Force Survey) and high rate of working poor are key drivers of vulnerability. The vast majority of workers are self-employed - either in subsistence agriculture or small scale often fragile businesses - or contracted on informal terms without provisions for minimum wage, job security and other labour rights. The low income schedule, coupled with absence of formal social security mechanisms, makes workers in the informal economy vulnerable to shocks and hinders income protection across the lifecycle.

Since early 2015, the Zambian economy is undergoing challenges that have put at risk the growth trajectory observed in the past decade. Galloping inflation is eroding households’ capacity to cover their basic needs; coupled with an ongoing energy crisis and a critical fiscal and borrowing position the economic outlook is extremely uncertain. There is a risk that the worsening macroeconomic and fiscal scenario will most seriously affect vulnerable workers in the informal economy as well as households living in poverty, who have limited resources to cope with economic shocks.

To cushion the effects of the economic downturn on vulnerable segments of the population, the Government has announced the scaling up of its social protection response as part of the Economic Recovery plan. Providing access to effective social protection instruments to the poor and the vulnerable is a critical investment in human development of Zambian citizens. The extension of social protection is not only an imperative from the perspective of social justice and curbing inequality, but it also makes economic sense. Evidence from Zambia and the region has showed that social protection can contribute to enhancing productivity and production, contributing to inclusive growth and prosperity for all in the short and long run.

The Zambia National Social Protection Policy (NSSP), approved by the Government of the Republic of Zambia (GRZ) at the end of 2014, provides the policy and strategic framework within which coherent and coordinated social protection programmes can be delivered to Zambian citizens. The policy provides for an holistic and comprehensive view of a social protection system, as it envisages the combination of measures to protect the income and basic needs of the most poor and disadvantaged (social assistance), promote economic development and self-reliance (livelihoods and empowerment pillar), provide effective insurance mechanisms for workers with contributory capacity (social insurance pillar) and to remove structural barriers leading to social exclusion (prevention and disability pillars).

Work is still needed in the development of programmatic, coherent institutional frameworks and financial management of social protection to allow the subsequent scaling-up of social protection interventions. Comprehensive implementation plans should address challenges of fragmentation as reflected by lack of coordination between and across pillars, insufficient extension of coverage to the informal sector and limited funding.