Diversifying Zambia's Copper-Based Economy

Welcome to Zambia's Copperbelt.

Commodity-based economies are often Johnny-One-Note economies: their fortunes rise and fall based on those of a single commodity (or at best, a handful of them). In Africa, Zambia has had boom and bust cycles based on copper. During the Cold War, its preeminence was such that it once ranked as the world's third-largest producer after the US and the USSR during the late 60s. As copper prices have waxed and waned, Zambia's economic well-being has largely followed a similar path.

So many decades later on, Zambia is emblematic of the challenges these commodity-based economies face of moving towards more diversified sources of economic output: 

The country’s economic development over the past decade has not attracted as much attention as some other African states, such as the oil economies of Angola, Nigeria and Equatorial Guinea, yet Zambia’s success has been almost as dependent on the export of a single commodity – in this case, copper. The government has pledged to reduce its dependence on copper exports, but there is no doubt that Zambia has benefited from its mineral wealth. China’s economic explosion and the long boom in the global telecoms industry has pushed up demand for Zambian copper, so the country now exports more and generates increased income per tonne of production. Annual copper production increased from 257,000 tonnes in 2000 to more than 900,000 tonnes last year, with the government setting a target of 1.5 million tonnes for 2015.

To be sure, there have been some moves towards diversification:

Some progress was made on rebalancing the economy last year. The strongest performing sectors during the year were transport, storage and communications, with a 27.1 per cent rise in GDP; construction (24 per cent); community, social and personal services (17.4 per cent); financial institutions and insurance (13.7 per cent); manufacturing (8.2 per cent); and mining (five per cent). In common with the rest of the continent, most people are employed in agriculture and it is here that stronger growth had most effect on living standards.

However, the noteworthy thing about African nations' efforts to diversify is that, well, there is not much diversity to them in emphasizing infrastructure:

Following a continent-wide trend, the government is banking on infrastructural improvements to help drive private sector development. The country’s road network is being upgraded, in urban and rural areas, to enable farmers to transport their crops to market – even during the rainy season. A total of 8,000 km of road is to be surfaced and sealed by 2017, taking the total to 16,000 km. Much of the work is being carried out by Chinese companies and funded by Beijing or Lusaka itself. The country’s first Eurobond issue in 2012 was 15 times oversubscribed and raised $750 million, but yields on the bond have increased as government spending has risen and another issue may be required later this year. In addition, Lusaka has taken out a wide range of loans with various Chinese state-owned organisations, probably on attractive terms, but whose details have not been published. 

I am of two minds on infrastructure as a development tool. On one hand, it may simply expedite the extractive (copper) trade by making it easier to get ores out of the country. OTOH, other industries should also benefit, but the details of what industries benefit and how infrastructure is geared to meet their needs in scant As any number of other countries also demonstrate, diversification is difficult.