Consumption Behaviour in Zambia: The Link to Poverty Alleviation?

K. Ludi: consumption behaviour in Zambia

6. Conclusion

Aggregate real PCE was estimated in Zambia for the years 1970 to 2001, and it was
found that the Zambian economy suffers from a very high MPC, which combined with a
declining APC, has disastrous implications for poverty relief in the country. In order for
Zambia to make inroads into solving poverty, it needs to achieve an economic growth
rate of 5 to 7 per cent (Standard Bank 2005). This is almost impossible with zero savings
and with a currently declining APC. Compounding the difficulties of these poverty relief
efforts is the fact that the average Zambian is regarded as being moderately to extremely
poor, spending approximately US$17 on consumption per month, as calculated using the
estimated PCE function.

In order to address poverty in Zambia, real incomes need to increase drastically so as to
lift Zambian PCE above mere survival levels. A grass roots point of departure is to
increase the standard of living, particularly in rural areas. Given that only 49 per cent of
the population have access to potable water, it is clearly absolutely essential to improve
all types of infrastructure in Zambia. Once this is done, and Zambian citizens have the
means to improve their standards of living without the structural constraints of poor
infrastructure, it will be possible to begin projects that target individuals’ incomes. 85 per
cent of the labour force is ‘employed’ in agriculture, yet the agricultural sector
contributes only 14.9 per cent to GDP. Increasing the dependency of the agricultural
sector is clearly not a sustainable option for growth in Zambia; however, development of
this sector in the sense of making individuals more self sufficient with regards to food
security is a necessity. The circumstances are ideal for the development of community
farming cooperatives, micro-finance and government-funded empowerment projects, all
of which need to improve the quality and quantity of the agricultural sector in Zambia.
The objective is to slowly shift the focus, once incomes are sustainably higher of course,
away from mere subsistence agriculture to more commercial and even non-conventional
agriculture, such as the cut-flowers trade.

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