Boosting Urban Job Creation Beyond Lusaka: How to Catalyze Balanced, Job-Rich Urbanization in Zambia

Despite the impressive, sustained rates of economic growth that Zambia has achieved since the start of the 21st century, and its relatively swift recovery from an economic downturn in 2015, the country’s ongoing structural transformation and urbanization processes are yielding highly uneven results. A growing working-age population is demanding more and better jobs, and inequality is rising steeply, with the Gini coefficient increasing from 42.1 to 57.1 between 2002 and 2015.

In this report, JJN argues that attention to the spatial dimension of these challenges is critical to tackling them. More specifically, promoting job creation and economic development in Zambia’s secondary and tertiary urban areas is key to an inclusive future in the country. If systemic issues of sluggish job creation and regional and inter- urban inequality are to be addressed – and if the Zambian government is to fulfill its promise, outlined in the Seventh National Development Plan, to “deliver a prosperous middle-income economy that offers decent employment opportunities for all Zambians of different skills and background” – policy frameworks must seek to unlock the unrealized economic potential in towns and cities beyond Lusaka. This requires tying current policy priorities such as decentralization and diversification policies to the economic empowerment of secondary and tertiary cities. Moreover, it requires a reinvention of flawed policies around industrial development.

To initiate an inclusive growth for the country, the report makes the following policy recommendations:

• Incorporate a stronger focus on job creation in the implementation of the National Decentralisation Policy.
  Place greater emphasis on empowering local councils to drive efforts for local job creation – both in policy formulation and policy implementation.
• Activate leadership and innovation at local levels of government.
  Implement “activation policies” incentivizing local councils to develop innovative programs around local economic development and job creation.
• Increase transparency in fiscal architecture and rationalize subnational transfers.
  Zambia must strengthen its intergovernmental fiscal system – opening geographic targeting to greater public scrutiny, stepping up support for emerging urban centers, and requiring Lusaka to generate more of its own fiscal resources.
• Introduce place-sensitive policies to spur investment in underperforming urban economies.
  Shift the cost-benefit equation of firms’ locational choices in favor of secondary and tertiary cities, especially those with unrealized potential for industrial development.
• Reform urban planning priorities to benefit local businesses and workers.
  Zambia requires a new urban planning culture that emphasizes mobility over “decongestion” – enabling the growth of local enterprises and better labor market matching. Further, councils must provide incentives for local enterprises to join the formal economy.

The growing divergence between Lusaka and other urban centers has been one of the most defining trends of Zambia’s development over the past three decades, and the Zambian government will struggle to deliver on its biggest promises – job creation, economic diversification, decentralization, and even rural development – unless it realizes that these priorities are bound up in the fate of its secondary and tertiary cities. The evidence and recommendations included in this report aim to support policymakers in forging a more balanced, job-rich urbanization process in Zambia – critical to the path of inclusive growth.