Can Zambia’s copper become a flywheel for industrialisation?

The paper argues that Zambia is caught in a 'commodity trap' and 'quiescence trap', where over-reliance on copper exports and a lack of economic complexity hinder broad-based growth. While copper production has improved social indicators like the Human Development Index since 2000, the country faces a severe fiscal crisis with government debt projected to reach nearly 150% of GDP by 2020. The author identifies policy volatility, specifically frequent changes to the Mineral Royalty Tax (MRT), as a primary deterrent to long-term investment and exploration. To overcome these barriers, the paper suggests replicating 'islands of effectiveness'—local-level collaborative governance models—such as the town of Kalumbila, which integrates mining with upstream and downstream linkages. Key recommendations include securing property rights, reducing the cost of doing business, and reversing the 5% concentrate import tax to fully utilise smelting capacity.

• Zambia suffers from a lack of economic complexity and is caught in a 'quiescence trap', where a deficiency in capabilities reduces the incentive to accumulate new ones because complementary capabilities are absent.
• The Zambian economy exhibits a stark structural imbalance, with copper accounting for 74% of total exports in 2017, while high-value manufacturing like copper wire represents only 0.86%.
• Zambia is facing a critical debt crisis, with a projected government debt-to-GDP ratio of nearly 150% by 2020 and a fiscal deficit exceeding 8% of GDP.
• Frequent and poorly timed changes to the Mineral Royalty Tax (MRT) have undermined investor confidence and reduced potential production; it is estimated that stable taxation since 2012 could have increased 2018 production from 861,946 tonnes to 1.099 million tonnes.
• The imposition of a 5% concentrate import tax has negatively impacted downstream value addition, leading Konkola Copper Mines (KCM) to announce the closure of its Nchanga and Chambishi smelters.
• Despite economic imbalances, there is a strong correlation between the recovery of copper production since 2000 and improvements in social indicators, including the UN Human Development Index (HDI) and a reduction in the proportion of the working poor.
• The town of Kalumbila serves as an 'island of effectiveness' by purposefully linking mining investment to sustainable development through an industrial zone and the creation of upstream (mill-ball plant) and side-stream (sawmill) linkages.
• Insecure property rights are a major barrier to investment, with only 6% of land in Zambia currently titled.
• Zambia's over-reliance on hydropower (97%) poses a significant risk due to declining rainfall; the author suggests incentivising decentralised renewable energy like wind and solar to free up power for manufacturing.

APA

HARVEY, R. (2019). Can Zambia’s copper become a flywheel for industrialisation? South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2019/09/Occasional-Paper-300-harvey.pdf

Chicago

HARVEY, ROSS. Can Zambia’s copper become a flywheel for industrialisation? South African Institute of International Affairs, 2019. https://saiia.org.za/wp-content/uploads/2019/09/Occasional-Paper-300-harvey.pdf.

Wikipedia

{{cite report |last1=HARVEY |first1=ROSS |title=Can Zambia’s copper become a flywheel for industrialisation? |publisher=South African Institute of International Affairs |date=August 2019 |url=https://saiia.org.za/wp-content/uploads/2019/09/Occasional-Paper-300-harvey.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{harvey2019can, author = {HARVEY, ROSS}, title = {{Can Zambia’s copper become a flywheel for industrialisation?}}, institution = {South African Institute of International Affairs}, year = {2019}, month = aug, url = {https://saiia.org.za/wp-content/uploads/2019/09/Occasional-Paper-300-harvey.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }