Real development is about having strategies that produce tangible results with provable and transferable
value within a given timeframe. Development happens when there is a detailed and clear vision able to
turn domestic capital – whether human capital or skill and natural capital like minerals and agricultural
produce – into commercially viable commodities for the benefit of a given group of people. The fact that
development, or the lack of it, affects people directly makes the word prone to political sloganeering.
However, the economic quality of it is what separates progressive policies from populism.
It is not the presence of valuable resources like oil, diamonds or copper that creates development and
organic domestic economic growth. On the contrary, what matters is the strategy adopted to link such
resources or assets to buyers, beneficiaries and custodians. In other words, citizens, investors and
government must be deliberately and carefully interlinked so that financial investment creates local wealth
and incomes that are taxable. Many countries endowed with natural resources may not add value to their
local economy because of misaligned policy and strategy. Such nations become the conundrum of
economists because of the disparity between their valuable natural resources and their endemic poverty.
The two basic options available from a policy perspective, where sectoral development is concerned, are whether to have big government or small government. In simpler terms, does government own all the resources including the mandate to distribute the benefits of these resources to the citizens? This is the
school of socialism which largely supports nationalization. The second perspective is to allow citizens to participate both in creating value for national resources and also distributing the benefits within the
economy. This is the democratic option which promotes public private partnerships.
Zambia, for example, has primary and secondary sectors. The former concerns extractive industries like
agriculture and mining which happen to be growth sectors in Zambia as per progressive national
development plans. The secondary sector refers to those industries that process and/ or deal in finished
goods. Again, electricity, water, finance and insurance are the significant ones in Zambia.
Information from the Central Statistical Office (CSO) shows that the only sector to have grown
exponentially and consistently in the last 30 years since the reintroduction of an open economy (and
democracy) is the Finance and Insurance (or financial) sector. The sector shrunk by an average of
(negative) 3.4 percent between 1985 to 1989. Conversely, that same sector rebounded with positive growth of 4.9 percent between 1991 and 1996 and has posted consistent growth since. This sectoral growth and its contribution to the economy has featured more prominently in Monetary Policy Committee (MPC)
updates as well as Ministry of Finance regular updates on the economy.
Surprisingly, this service sector is not yet classified as a growth sector in a deliberate way alongside
agriculture, livestock and fisheries, mining, tourism and manufacturing, commerce and trade. This is
despite the fact that world trade has shifted significantly from trading in hard commodities or goods to
transactional trade in services. Finance and more generally Information and Communications Technology
(ICT) have been at the center of this global shift in favour of services. The World Trade Organisation
(WTO) and the Organisation for Economic Co-operation and Development (OECD) data shows trade in
goods to have fallen below 40 percent in the last 20 years. The larger percentage, over 70 percent is trade
in services.
Infact, trade in service contributes more than that of goods towards the total value of world trade. This is
partly why the biggest economies in Africa, Nigeria and the Republic of South Africa (RSA) aggressively
pursue trade in services. Both the Nigerian and Johannesburg Stock Exchanges (JSE) are two of the largest in Africa. It is not surprising to find indigenous banks from these two countries exported to other African
nations with representative offices in selected financial capitals of the world.
The liberalization agenda in Zambia is largely responsible for the growth of the service sector through
policy deregulation: open borders allowed international trade to resume and thus the need for financial
transactions to flow across Zambian borders. The increase in the number of subsidiary banks stationed in
Zambia has meant a natural increase in the provision of financial services in the domestic economy but also created valuable use for money, thereby, bringing down inflation from 3-digit figures from the mid-
late 1980s to 2-digits by the mid-90s. the creation of the Ministry of Technology so far should create impetus
to support initiatives that grow the service sector and allow Zambia to compete on the global front. Overall,
we mush deliberately focus on this service sector as we do the trade in goods.
