THE UNIVERSITY OF ZAMBIA

SCHOOL OF EDUCATION
DEPARTMENT OF EDUCATIONAL ADMINISTRATIONA AND POLICY STUDIES

NAME : MUMBA BENARD……………2017007822 (land & conclusion)

: MULENGA NATASHA……….2017010037 (labor)
: MUMBA ZETUNE……………..2017010454 (introduction)
: MUNA MOONO………………2017007160 (entrepreneurship)
: MUSONDA CHEWE…………..2017002813 (capital)

LECTURER : TOMMIE NJOBVU, PH.D.

COURSE : EAP 9075

ASSIGNMENT NO. : TWO

DUE DATE : 9TH JULY, 2021

QUESTION : “ZAMBIA IS RICH, YET SO POOR.” DISCUSS THE STATEMENT IN THE CONTEXT
OF FACTORS OF PRODUCTION AND THEIR UTILIZATION IN ZAMBIA’S SOCIO-ECONOMIC
DEVELOPMENT.
To answer the empathic question given requires an analytical approach towards how Zambia is
rich yet so poor. The country won its independence in 1964 and was among the strongest
economies in Sub-Saharan Africa with its copper mine ranking ninth amongst the world’s richest
copper deposits, also having a great deal in tourism with it showcasing one of the world’s seven
natural wonders being the Victoria falls amongst other things as well as the supplementation and
exportation of electricity to some of its neighboring countries like Tanzania. However, today, 64
percent of the population is suffering from poverty with statistics indicating that three out of four
people are living in poverty. This academic writing will begin by defining the key words; the
main body will discuss the statement ‘Zambia is rich yet poor’ in terms of the factors of
production then the conclusion.

The primary purpose of economic activity is to produce utility for individuals, production is the
activity either which creates utility during a period or which increases the ability of the society to
create utility in the future. Steedman (1979) defines production as the organized activity of
transforming resources into finished products in the form of goods and services; the objective of
production is to satisfy the demand for such transformed resources. Factors of production include
land, labor, capital and entrepreneurship. In simple words, factors of production is an economic
term that describes the inputs used in the production of goods and services in order to make an
economic profit.

The definition of being poor is having little money or no belongings, or lacking something. An
example of poor is living below the poverty line. Fundamentally, it is the denial of choices and
opportunities, a violation of human dignity; it means lack of basic needs (United Nations, 1998).
At the most general level, economists define wealth as anything of value that captures both the
subjective nature of the idea and the idea that is not fixed or static. A community, region or
country that possesses an abundance of such possession or resources to the benefit of the
common good is known as rich. The United Nations definition of rich is in terms of monetary
measure which includes the sum of natural, human and physical assets (United Nations, 1998).

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To begin, the term ‘land’ generally refers to the surface of the earth. But in economics, it
includes all that, which is available free of cost from ‘nature’ as a gift to human beings. Land
stands for all nature, living and non-living which are used by man in production (Tahir, 2020).
Land is an important factor of production. That means that it plays a role in production of goods
and services in the economic sphere. Land by itself has not ability to produce. The size of the
land does not mean the more goods and services one produces. If it were so, countries with the
largest size of land would be the richest in the world. What makes it the important factor is in the
utilization of land per square meter. It is in the efficiency, efficacy and the effective use of it that
determines how much one can produce economically on that land (ZambiaInvest, 2020).

Notably, modern economists consider land as a specific factor of production, which can be put,
not only to a specific purpose but to several other uses. Land has specific or distinct
characteristics that differentiates it from other factors of production some of which include;
Firstly, it is a free gift of nature. This basically means land is available free of cost from nature,
in the initial stages man paid no price to acquire it. Secondly, the supply of land is fixed meaning
land cannot be increased or decreased like other factors of production. Also, immobility in that
land is not physically mobile to be shifted from one place to another like other factors of
production. Other characteristics include, land being a primary factor of production, land being a
passive factor of production, land having difference in fertility, land being heterogeneous and
many others (Oakland, 2011b).

The topic is premised on the idea that Zambia is rich and yet Zambia is poor because of the way
it utilizes its factors of production one of them being land. In this context, we are considering
Land as one of the major factors of production that Zambia is endowed with but yet underutilized
or not utilized more efficiently (Tahir, 2020).
In factual knowledge, Zambia is a landlocked country located in Southern Africa, to the east
of Angola. It has a total area of 752,618 square kilometers (slightly larger than France), of which
9 220 km2 is water. Despite the massive size of land, Zambia has seen underutilization of the
land. According to 2011 statistics, 4.52 % was used for arable land, 0.05% was used for
permanent crops and 95.44% was used for other use. We know that the size of land that Zambia
has is larger than that of France yet France is one of the richest countries in the world with

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Estimated GDP of 2938.27 Billion United States Dollars (USD) while Zambia’s GDP is 18.96
Billions USD. This represents less than 0.7% of Frances GDP. In this scenario, this should mean
that the size of the land does not entirely determine the extent as to how prosperous a nation will
be but it is the utilization of that land that matters
(https://www.worldbank.org/en/country/zambia/overview).

Comparatively, we have seen also that Malawi’s land is one seventh of the size of Zambia yet
Malawi produces more tons of maize than Zambia. Zambia’s 2021 maize production is
3,387,469 MT while Malawi is production is almost 4 million MT. This further shows that
Zambia is rich in Land but yet poor. There is poor utilization of this resource. Malawi is more
efficient per square Kilo meter use of land that Zambia and thus make more income than Zambia
is (Oakland, 2011a).
It can be noted that one of the most prominent factors leading to Zambia being so poor despite
having the vast resource of land stems down to the fact that the main source of wealth
contributing to Zambia’s GDP is centered on mining of which the prices are not determined by
Zambian’s themselves. This can be seen in comparison to other countries that seek utilization of
land in terms of activities like agriculture which encompasses; aquaculture, horticulture, forestry,
animal production and agro-metrology only to mention a few. These activities are seen and
proved to richly contribute to socio-economic development of many countries. Whereas majority
of Zambia’s agriculture activities is concentrated on subsistence level (ZambiaInvest, 2020).

Beyond question, Maize has dictated and still dominates Zambia’s agriculture sector and its
production dates back to the 16th Century, the period when Zambia’s main staple crops were
sorghum and millet. With adequate increase in knowledge of the advantages of having diverse
agriculture in Zambia’s social economy, maize gradually replaced sorghum and millet as the
country’s staple crops and by 1964, maize had already accounted for more than 60% of Zambia’s
total planted area for major crops (Byerlee and Eicher 1997). Up to the early 1990s, the sector
was still dominated by maize making it well known among countries in the southern region of
Africa but still lacked private sector participation in the areas of agricultural marketing, input
supply and processing thus making the socio-economic status of small scale farmers poor.

Further on, in 1992, the Zambian government incorporated agricultural sector policy reforms, as
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part of the broad-spectrum economic reforms that fell under pursuit of the structural adjustment
programs. These were targeted at liberalizing the agricultural sector alongside promoting private
sector participation in the agricultural supply chain (Ministry of Agriculture and Co-Operatives
2004). Observably, since Zambia’s launch of the Comprehensive Africa Agricultural
Development Program (CAADP) in 2006, the expectation has been that the agricultural sector
would improve in relation it’s contribution towards the GDP and GNP, of-which it did but only
to a certain extent thus still leaving a considerable number of small scalers and citizens in general
with arguable socio-economic improvement. CAADP is aimed at achieving and maintaining a
higher path of agricultural-led economic growth in Africa and for Zambia; it is vital to
supporting and strengthening implantation of national development plans such as the recent Sixth
National Development Plan (SNDP) (Ministry of Agriculture 2017).

With respect to Land utilization as a factor of production in an example of agriculture, Zambia’s

agriculture is dominated by smallholder farmers and is still underdeveloped (Chirwa and
Odhiambo 2016). However, Zambia still has the potential to expand its agricultural production,
owing to its massive resource endowment in arable land, labor and water resources. Moreover,
bordered by eight countries and being a member of the Common Market for Eastern and
Southern Africa (COMESA) and the Southern African Development Community (SADC)
bolsters its market for agricultural produce. The country has access to the European Union
agricultural markets through the Everything but Arms (EBA) initiative in addition to access to
the U.S. market through the African Growth Opportunities Act (AGOA). By 2009, exports of
agricultural products from Zambia to COMESA had reached a total of 125 million US$ and to
the European Union a total of 147 million US$ (Ndulo and Mudenda 2010). However, that has
not been the case in recent times due to the fail in maintenance and investment towards the
expansion of such mechanisms and ideas to booster the respected field of land utilization thereby
making Zambia be amongst countries that have vast resources making it rich but yet still so poor
in terms of socio-economic status and development of its citizens.

In order for Zambia’s socio-economic status to develop, a change in mindset and the way we
approach the utilization of land has to be entirely changed, well thought through as well as
strategized. This is because by virtue of land being a primary source of production, it has the

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capacity to change the entire landscape of Zambia’s economic status just as seen in other
countries (USAID, 2016).

Subsequently, another factor of production in the world of economics is capital goods widely
known as capital. According to Tahir (2020) capital is usually mentioned or considered to be
money. This however, should not be the case because money is not directly regarded a factor of
production because it is not an element that directly takes part in the process of production.
Money originates in the form of a commodity, having a physical property to be adopted by
market participants as a medium of exchange. For example, one cannot use or ask the actual
paper money to construct a building or even use banknotes as a building just as one cannot use
bank notes or coins to transport commercial goods in the production process.
Nonetheless, money is something that is considered as a current medium that expedites the
production process, it is a medium that achieves this by enabling those running the production
process such as company owners to purchase goods that will help them enlarge their various
businesses and it is also used to pay wages of their workers. For example, in business economics,
a carpenter may decide to purchase a piece of land and have a building constructed there that he
may use it as his own permanent workstation (Shikha, 2019).

It is worth mentioning that capital is not the same everywhere. In other cases, such as the
education sector: textbooks, blackboards, desks and so on may what be viewed as capital in the
production process. This therefore, implies that capital as a factor of production refers to goods
and services purchased for the purpose of production. These goods and services include
industrial and commercial buildings, working equipment, transportation such as tractors or buses
among others (Amadeo and Brock, 2020).

Further on, Shikha (2019) noted that many people sometimes confuse consumer goods with
capital goods. This is so because often times, the same type of goods that might be used in the
process of production are used also as a good or service by people. For example, a family may
decide to purchase an open van for the purpose of transportation for the family. On the other
hand, an individual or business owner such as a farmer will purchase the same open van for the

5
purpose of transporting his or her produce. The former purpose of purchasing the open van is
merely for consumption but the latter is for further utilizing the good in the production process.

In a country like Zambia, capital goods that play a role in the production process may range from
a number infrastructure such as roads, trains, telephone lines, machinery used in various sectors,
among others and may contribute to the economic growth and social development of a country,
thereby adding to the country’s wealth. Knowing this, Zambia has seen itself investing in
infrastructure development such as in the upgrading and construction of roads around the
country. However, despite the recent increase in the investment of such a good, Zambia has
continued to struggle as far as economic wealth and development is concerned. This can majorly
be attributed to the fact that the goods transported on the constructed and upgraded roads are not
sufficient to contribute to the country’s wealth. Therefore, it can be concluded that the roads that
the government has upgraded and constructed do not adequately or rightly serve as a way to
socio-economic development (Tahir, 2020).

One other example of a capital good in Zambia that has not been utilized enough to build
thesocio-economic status of the people and the country as a whole is the motor vehicle assembly
plant. The motor vehicle assembly plant which is located Livingstone in the southern part of the
country was fully operational until it was shut down and left out of use together with its
infrastructure in the year 1992 due to harsh economic conditions that could not be controlled at
the time (Zambia daily mail, 2016).

Additionally, it is very much clear that the motor assembly plant if given an opportunity to fully
operate is capable of producing at least 20 cars in a single day and would definitely make many
profits that would immensely and positively contribute to the socio-economic growth and
development of the country. However, despite the continued promises of reviving the motor
vehicle assembly plant and lack of implementation of these plans, it is the lack of utilization of
infrastructure such as this one which is meant to serve greatly as capital in the production process
that caused Zambia as a country to not make greater economic progress (Zambia daily mail,
2016). Infrastructure such as this one has potential to serve as a great source of capital even if it

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were used for a different purpose other than its initial intended purpose unlike leaving such
infrastructure unutilized and laying in ruins.

In a research conducted by Hardiman (2021) Zambia airways which was the country’s state-
owned national airline is also another example of a capital good in Zambia which has not been
utilized to contribute to the production process and the enhancement of the socio-economic
development of the Zambian people. The airline that was liquidated in 1994 and has remained in
the same state until now has great potential of serving as a source of capital to the nation. The
aircraft and other machinery owned by the latent airline could be a way of generating income
through production, as it would help facilitate greater international trade, tourism and serve as a
way of creating more jobs for its citizens such as employing more pilots, flight attendants,
baggage handlers, reservation agents among others (Uniting Aviation, 2018).

Moving on, considering that Zambia has been making efforts to invest in the agriculture sector in
the bid to contribute to national development. It is for this reason that (Aditya, 2020) noted that
nations that have prospered economically through investment in the agriculture sector have
endeavored to invest in capital goods such as high-technology machinery for use in commercial
farming. It has been found that by using machinery and equipment in agriculture, a single farmer
is capable of producing food to feed over a hundred people when compared to one who merely
uses labor. Using agriculture machinery and equipment such as tractors, plows, cultivators,
planters, drills, dusters, irrigation systems, pickers, mowers among other farming machinery is
bound to help farmers produce high quality of livestock and grains. It also increases the amount
of yield that can be produced in the shortest possible time. However, for a country like Zambia
which has encouraged so many of its citizens to engage into farming but has not invested so
much into agriculture machinery, seeing a great and positive economic change through
agriculture is something that might be considered a far-fetched dream.

Labour is another factor of production. Labour is the efforts exerted to produce any goods and
services. It includes all human efforts- physical exertion, mental exercise, and use of intellect. It
is done in exchange of an economic reward (Tahir, 2020). Zambia's economic growth has been
positive since 2000 but poverty has remained static. In fact, the economy has been growing

7
above 5 percent for eight consecutive years from 2005 to 2013 (Worldbank, 2016). Despite this
remarkable growth, poverty levels have remained stagnant. The high poverty levels in the
country have been accompanied by high unemployment especially among the youth. As
observed, youth unemployment is not only because of inadequate job opportunities but also
because of lack of skills, work experience, job search abilities and financial resources to find
employment. Employment levels of a country generally determine an economy’s productive
capacity and consumption levels. Economic activity entails production of goods and services for
the purposes of improving living standards both at individual and national levels. The larger the
proportion of people engaged in meaningful economic activities the higher the output (CSO,
2012).

Despite Zambia being ranked ninth as the world’s top copper producers and second in Africa it
has a challenge in employing its citizens. While Zambia has been experiencing rapid economic
growth, hovering around 6 per cent per annum a decade pre 2011, its over reliance on copper has
made it vulnerable to falling commodity prices (USAID, 2016). Since the beginning of 2016
copper prices have been falling. As a consequence, the copper industry dismissed 15 000
workers, prices have soared by 20 per cent and the local currency, the kwacha has lost over 50
per cent of its value (Aguirre, 2016; Mabenge, 2016; McGroarty et al., 2016). Instead of the
government producing raw materials from the copper or other minerals it has in order to produce
more jobs for its citizens, it prefers to sale its minerals at cheaper prices and to cut down on the
number of employees in the mines. The increased numbers of people being dismissed from work
increases the poverty levels in the country and cause more strain on the few workers that have
remained working.

Essentially, the Foreign Direct Investment (FDI) is an important contributor to the Gross
Domestic Product. In Zambia, the sector that attracts most FDI is mining, followed by
manufacturing and construction. Opportunities for FDI have increased with the devaluation of
the kwacha, as this makes the country’s wages and production costs lower relative to those of its
foreign counterparts, and consequently more attractive for productive capacity investments.
However, despite being one of the biggest recipients of FDI in Africa, Zambia’s recent FDI
inflows have significantly decreased. This can be partly explained by a lack of trust on behalf of

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investors following recurrent electricity shortages and inconsistencies in the mining taxation
regime (UNCTAD, 2016). The tax regime changed three times between 2013 and 2016,
including a major change in the mining fiscal regime in 2015 (Aguirre, 2016; IMF, 2015).
The impact of FDI on employment is twofold. On one hand, foreign investors can contribute to
the diversification of the Zambian economy, create jobs and promote technology and knowledge
transfers to Zambian workers (Fessehaie and Morris, 2013). For instance, 76,000 jobs were
created through Chinese investment during 2000– 12 (Sinkala and Zhou, 2014). However, on the
other hand FDI can also have a negative impact on employment.

Notably, Foreign workers are brought into the country to do jobs that Zambians could potentially
do themselves. If labour costs are lower in the investor’s country than in Zambia, the chances are
that Zambian workers will be underpaid is high. Finally, as foreign investors are not as
constrained as local investors in respecting the national law on labour, they might provide their
workers with poor working conditions. One example is the 2007 explosion at a Chinese-owned
explosives factory, where 49 miners perished due to poor safety measures (Moriyasu, 2016;
Carmody and Hampwaye, 2010).

Nonetheless, economic growth has been concentrated in capital-intensive industries such as

construction, mining and transport. Growth has taken place in urban areas, while the poorest live
in remote areas that are barely connected to markets and the cash economy. Economic growth
has not been labour intensive, particularly in those sectors in which the poor tend to work as
subsistence agriculturist and in the informal sector. The World Bank (2012) highlights two
elements directly related to poverty. Firstly, the pattern of economic growth in Zambia has been
highly unequal in remote rural areas, meaning some sectors and populations have benefited more
than others. Urban areas have more industries, good communication towers, and businesses that
can support informal employment whereas in rural areas there is bad communication, no
industries or businesses that can support and help the people living there. People earn little
money from wages therefore, they get things on credit making businesses slow and business
owners find it difficult to continue working. The prices of goods are very expensive too.

9
Secondly, the overall economic growth has not increased the incomes. Employee salaries have
remained static despite the prices of goods and services going high. It makes it difficult for
families to sustain themselves as one’s salary is not enough to sustain them for a whole month. It
also makes it hard for the people to invest in businesses that can help them elevate from poverty
as the money is mostly used on food, rentals, transport, school fees and medical bills (World
Bank, 2012).

Undoubtedly, Zambia is blessed with abundant natural resources, but economic diversification is
still a key development challenge. The majority of people in rural areas and some in urban areas
rely on agriculture as the main source of livelihood. Agriculture is, therefore, the sector with the
most potential for driving broad-based and inclusive socio- economic growth. The vast majority
of agricultural households where the head of household is a farmer live in poverty (Tahir, 2020).

Consequently, the productivity of small farms is very low, which implies that earnings are also
very low and insecure, and those working on them. The small scale farmers are unable to afford
agricultural inputs. The smallholder himself and his family have no social protection. Even wage
employment is no guarantee against poverty in rural areas, almost half of the rural households
where the head is a salaried worker are poor, and over a quarter of them live in extreme poverty.
While for people in urban areas, low salaries and wages, lack of employment and lack of capital
for business. If the goal of reducing extreme poverty is to be achieved, there is a pressing need
for the creation of productive jobs (UN, 2015).

Unfortunately, the informal economy remains a significant problem in Zambia, as it does not
seem to be improving over time. Nine out of ten workers are in informal employment. This
means that they lack employment benefits and basic social or legal protection, work long hours
for low earnings and are exposed to inadequate and unsafe working conditions (ILO, 2016). This
is problematic for several reasons. First, it poses a problem in terms of health, as if an informal
employee is sick, the chances are that he/she will not seek medical advice or help because of
high costs that he/she cannot afford. The same applies to accidents that take place at work. The
worker will also most likely keep on attending his/her workplace, despite his/her medical
condition, because of a lack of paid sick leave. Having a healthy working population is key to

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development and to Zambia’s prosperity. Second, informal employment creates instability in the
employment market. Workers come in and out of employment and face uncertainty about their
future. Informal employment usually comes without a written contract and is short term, part
time or temporary. This makes it difficult to control who is working and who is not, as the
figures constantly change. It then becomes problematic to have reliable employment figures on
which the government can base its policy formulation (Shah, 2012).

Thirdly, employment in the informal sector means that firms are not registered with the
government, that they do not have a complete set of accounts, or that their workers are
unregistered. This is of course not desirable as the firms and workers avoid taxation despite the
country having many business owners, on which government revenues are partly based. Having
more firms and workers registered nationally would contribute to the government’s budget and
could help in making it less dependent on revenues from copper (Tahir, 2020). Last but not least,
wages in the informal economy are low.

It is without question, most of the unskilled workers get less money despite them doing hard
labour. This is makes the labour laws not being fully implemented and followed. Most people in
Zambia have little knowledge on their rights and how much they are expected to get per hour. If
the Zambian population is to become more prosperous and escape the poverty trap, then workers
need to move to formal employment, where wages are higher and benefits granted. Low-paid
informal employment goes against the promotion of productive employment (Phiri and
Nakamba, 2012).

However, despite impressive performance in economic growth and global economic

competitiveness, Zambia’s indicators in terms of human development have been disappointing.
In the Southern African Development Community (SADC), Zambia is among the top five
performers in business competitiveness, but it is one of the five worst performers on human
development indicators. Companies or organizations are failing to offer continuous professional
development by educating its workers and to offer better health services for them. Human
development influences economic growth through economic productivity and savings gained

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from well-educated and healthy citizenry and through a country having high skilled work force
that could stimulate trade through increased exports (Harttgen and klasen, 2012).

The utilization of labour in Zambia’s socio-economic development is important as it helps

workers (youths) in stepping in to adulthood, a milestone towards independence and self-
reliance. For children and young people living in poverty and in other disadvantaged situations,
employment is often the main means for attaining a better life, though such employment is often
informal with poor or exploitative working conditions. For more fortunate youth, prospective
employment influences their choice of education and training, and increasingly, their decisions
regarding marriage, kinship and cohabitation (Bechterman, Olive and Dar, 2004).

Reasonably, the growing and persistent employment has a positive impact on social
development. Youth employment, in particular long-term youth employment, can remove
frustration and low self-esteem, and can lead to decreased vulnerability among some young
people to drugs, diseases and crime. Youth employment can also lead to the value and inclusion
of young people. There is evidence that employment can expose youth to greater chances of
higher future wages, repeated periods of employment, longer employment spells as adults, and
them being income rich. Employment promotes social integration, intergenerational dialogue,
citizenship and solidarity. Creating and fulfilling income-generating job opportunities for people
can have direct positive consequences for poverty alleviation and therefore, it is important to
utilize labour for social development in the country (Harasty, Kwong, and Ronnas, 2015).

In this same relation, economists suggest that lower unemployment normally reduces
government borrowing and helps in economic growth (Tahir, 2020). If the unemployed gain
work, they will increase spending, and this will cause a positive multiplier effect, which help to
increase economic growth and development. Workers produce valuable goods and services, and
in turn receive a wage, which they can spend on buying the goods produced which also benefits
other businesses who depend on consumer sales to stay open and pay vendors. Hiring additional
employees for small business can achieve these effects on a small scale and increase the money
circulating in the marketplace resulting to sustained growth which stimulates jobs and
contributes to lower unemployment rates which is turn helps to reduce income inequality. High

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employment means a greater number of goods can be produced as well which means increase in
output and productivity and inversely leading to economic growth and development (Umar,
2019).

Overall, an increased level of employment growth involves both a high economic performance,
expressed mainly by the high level of work performance and especially the development and
diversification of the services sector. It is important to facilitate the entry of skilled workers into
the productive sectors of an economy, and enabling the economy to sustain or increase its
productivity and competitiveness in the global market place. Thus, Zambia needs to focus on job
creation and retention of workers because jobs are necessary to drive shared and sustainable
economic development. For many, economic development should be about increasing political
freedom, cultural and social freedom and not just about raising incomes (Umar, 2019).

Realistically, creating jobs, the sort that come with good pay, good benefits, and good working
conditions, including the right to freedom of association and collective bargaining is the key to
growing the global middle class and creating the aggregate demand that we need to power the
world economy. Without good pay, workers cannot become powerful consumers. In addition,
without the rights they deserve, workers lack the economic stability they need before making big
investments in themselves, their children, and their societies (Bechterman, Olive and Dar, 2004).

Therefore, it is well recognized that the labour market plays a central role in the development
process, having access to stable and protected employment is the most sustainable path to
existing poverty and promoting inclusion. In Zambia the labour markets continue to be
characterized by persistent informality, low levels of productivity and pay, insufficient access to
social security and employment benefits, along with inequalities in outcomes for women, youth
and specific groups in society. Overall, the labour market has failed to help individuals and
families escape poverty.

Having looked at all the three factors of production, another important factor of production is
entrepreneurship. Entrepreneurship skills are one of the achievable bases of positive and
effective industrialization. Since the period of early 1990’s, there has been an increasing

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awareness of the imperative social and economic roles of the small business sector and of the
importance of entrepreneurship to the growth of the economy. This has been true in both the case
of still developing and already developed economies of the world. In Zambia particularly, the
concept of life time employment is slowly disappearing and people have turned to self-
employment and enterprise creation. Various authors have endeavored to highlight the
significance of entrepreneurship in the socio-economic development of a country (Baron, 2008).
Findings have established that most emerging entrepreneurs in Zambia start up very well and
their businesses appear to be headed for growth and bright future. However, it is apparent that
the majority of these business enterprises do not make it over the “entrepreneurial start up
hump”. It is for this reason that there are factors that contribute to entrepreneurship failure in
Zambia despite “being rich” and having the potential to raise the socio-economic status of its
people.

Entrepreneurship in economics refers to creating and building something of value from

practically nothing by turning odds in your favor. In reasonable terms, entrepreneurship is the
process of creating and seizing opportunities and pursuing them regardless of the resources one
is currently in control. Fundamentally, entrepreneurship is a human creative act. It is a factor of
production that involves and considers finding personal energy by inviting and building an
enterprise organization, rather than just watching and analyzing, or describing one (Baron, 2008).
Additionally, entrepreneurship customarily requires a vision, and the passion, commitments and
enthusiasm to transmit this vision to other stakeholders such as partners, customers, suppliers,
employees, and financial backers (Malunde, 2012). In this light, it also demands a willingness to
take calculated risks both personal and financial.

To begin, prior to gaining independence in 1964, Zambia had a very small number of indigenous
businessmen. By the time of Independence, Zambia did not have businessmen and women who
were experienced in managing complex businesses. The lack of development of entrepreneurship
in Zambia can be attributed to the economic policies that were formulated soon after
independence. Policies that came after the return of multiparty democracy in 1991 proved to be
more positive for entrepreneurship growth than those before (Mumba, 2017). The UNIP socialist
economic policies from 1968 to 1991 were characterized by nationalization of industries. The
government took control of major companies and ran the economy through these parastatals and

14
enterprises. These parastatals and enterprises were state protected monopolies such that they did
not have competition for the market in their respective industries. The policies did not encourage
entrepreneurship at the time.

Notably, Mumba (2017) articulates that one of the most recognizable internal constraint to the
socio-economic development of Zambia’s private enterprise lies in the local traditions of many
Zambian people. For example, most especially in the independent countries of East and Southern
Africa where contact with Western societies has been fairly recent, there are still relatively few
indigenous “entrepreneurs” and has covered a rather limited field mainly (trading, fishing or
cattle farming, for example). Such entrepreneurship as does exist in Zambia has consequently
been largely imitative rather than innovative, and although some exceptional entrepreneurs have
been very successful, many of these have gone into business only because of their lack of formal
education and their consequent effective exclusion from more secure and prestigious forms of
employments. Therefore, this to a large extent leads to entrepreneurs not being able to maximally
utilize other factors of production such as land (fishing) and capital (cattle farming) in light of
entrepreneurship.

Moreover, Kuzilwa (2005) continues by saying that the practicing African entrepreneur such as
in Zambia, is usually inhibited by a passive hostile social environment. In this regard, it is
interesting that many of the more successful Zambian businessmen have broadened their
horizons by foreign travel, or at least by working fairly closely within an expatriate company or a
government agency with Europeans. A comparative analysis shows that in West Africa, where
businessmen are generally better educated and longer established than their counterparts
elsewhere, many have had association of some sort with Europe while the larger size of
businessmen in countries like Zambia have usually spent some time in countries like Zimbabwe
or South Africa. This goes to say, experience abroad, which itself witnesses entrepreneurial
initiative in the person who seeks it, does serve to show how other societies are organized and
reveal possible business opportunities which might be exploited at home.

However, because of societal and cultural factors, it becomes virtually impossible to avoid
increasing family responsibilities and commitments. This is also another reason as to why
Zambian entrepreneurs seem not to reach their highest capabilities despite Zambia being rich.

15
The Zambian extended family in light of an extensive social security system is of course a drain
on the successful businessman (Mumba, 2017). Even though any paid employee has a relatively
fixed salary which he cannot consistently over spend, the independent businessman or
entrepreneur rather continually faces the danger exacerbated by the fact that his accounting
system, as it is may not disclose what is happening may draw not only his profits which this
limits his capacity to re-invest but also in accumulated capital assets. Hence, the business
remains at the same level worst still may cause the business to reduce in value or completely fail.
Another social factor may include lack of support from the community, there is a misconception
that a product that is being sold by an indigenous person may not be as strong as a western
product, and the local prefer buying from foreign companies than their own people. Apart from
that, foreign companies are given better conditions of operations than locals.

The conventional analysis of the other problems facing indigenous entrepreneurs in Zambia and
different African countries are strikingly similar. Basically, these are seen to be the difficulty of
raising sufficient capital and obtaining credit, the lack of appropriate knowledge, experience and
skills and the presence of non-African competition. Thus, at all levels, the lack of commercial
and technical expertise, together with the collective reputation of Africans for being slow to
service and repay their debts, makes it difficult for the entrepreneurs in Zambia to be able to
acquire either loans or credit through the usual banking or trade channels (Malunde, 2012). The
internal management problems of entrepreneurs in Zambia vary, of course, according to the
nature of the business concerned and technical in capabilities obviously loom relatively large in
small industries and in provision of specialized services (ranging from shoe repair to panel-
beating and electrical contracting).

All business ventures regardless of size require finances from inception and throughout their life
cycles. The amount invested could greatly influence the size of the undertaking, which in turn
could determine the very survival of an enterprise if other factors were held constant. The
entrepreneur could require seed capital to start the business, to operate and manage the business
enterprise. Studies by Kuzilwa (2005) pointed to finance capital as one of the key constraints to
small enterprise growth. Small enterprise owners do not easily access finance to expand business
and they were usually faced with problems of credit restrictions and need for collateral among
other numerous conditions. This means that when pursuing growth, entrepreneurs do not have

16
sufficient financial resources to enable them achieve the intended target. In a study by Malunde,
(2012) on factors affecting growth of micro and small-scale enterprises, it was noted that
unavailability or lack of information about alternative sources of finances and inability of
entrepreneurs to evaluate financing option were some of the major problems which entrepreneurs
faced in their pursuit for growth. In essence, lack of information about alternative sources of
finance is one of the constraining factors or hindrances to small enterprise growth.

In conclusion, it can be deduced from this academic piece of writing that despite Zambia having
vast resources both natural and physical, Zambia as a country has had great challenges in
realizing and utilizing the factors of production needed in addressing the status quo of citizens as
well as the socio-economic development that it has widely pursued for a long time.
However, it remains a country with great ability and potential that can acquire the socio-
economic development needed if the right implementation strategies are put in place.

17
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