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Launch of Top Line Findings
Wednesday 16th June 2010
Intercontinental Hotel – Lusaka, Zambia
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OUTLINE
• Background
• Approach
• Profile of the Private Sector
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Scope, scale & key characteristics
Drivers of informality
The infrastructure dilemma
Complexities in access to finance
Productivity drivers & profiles
New segmentation provides powerful insights
• Implications
• Next Steps
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Background & Rationale
• A vibrant and productive private sector is key to promoting growth
& prosperity in Zambia
• Accelerated & diversified growth will require a substantial increase
in investment and business productivity
• GRZ & other stakeholders are determined to broaden growth in
rural, as well as urban, areas
• MSMEs dominate in numbers of enterprises, but heretofore there
has been little information about them
• Public & private players must better understand the characteristics
& constraints of Zambia’s private sector
• This survey will help to improve policy, programme, and service
design & delivery
– NB: The source for all data is the ZBS, except for slides 5-7, which are sourced from the
World Bank Investment Climate Report, 2009, and slide 10, which was sourced from the
Zambia Labour Force Survey, 2005.
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Zambia’s business environment is a great deal
better than it was in 2003
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However, performance of large Zambian manufacturing
businesses – as measured by labour productivity – lags far
behind the performance of large manufacturing enterprises in
the best performing African economies
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Yet, these low productivity firms can thrive due to lack of competition.
Zambia has a much lower competition index compared to firms in more
successful economies (meaning firms with low productivity have high
market share)
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A NEW APPROACH GIVES US A NEW VIEW
• The MSME component
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Nationally representative survey of 4 800 MSMES
Covered urban, peri-urban and rural areas
All nine provinces
Small, difficult to find, and informal businesses are fully represented
• The Large Enterprise component
– Sample of 161 large enterprises
– 50+ employees
– Urban, peri-urban & rural
• Complemented by:
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16 June 2010
Government's Labour Force Survey
World Bank's Doing Business Indicators
World Economic Forum's Competitiveness Report
World Bank's Investment Climate Assessment
FinMark Trust’s FinScope Consumer Survey
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MSMEs AND LARGE ENTERPRISES IN ZAMBIA
OCCUPY TWO DIFFERENT WORLDS
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While larger firms drive the economy, they employ only 7%
of the workforce. Most Zambians are employed in its
MSME sector.
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Two-thirds of MSMEs in Zambia are tiny, owner-operated
businesses
Most of the remainder are microenterprises with 10 or fewer employees
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Most MSMEs are based in rural areas & are
small farms or retail traders, whereas Large
Enterprises are highly diversified
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MSME owners have less formal education than Large
Enterprise managers (as measured by the highest
education level reached)
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LOW PRODUCTIVITY FUELS INFORMALITY
• Differences in access to infrastructure drive differences
in productivity
• Almost all large enterprises are registered with the
relevant government agencies
• But few MSMEs – especially in rural areas – are
registered with any government agency
• Informality is a rational choice
• Avoiding taxes & regulation is NOT the driver of
informality
• Making infrastructure services more available should
encourage registration, by improving productivity
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Low incomes and poor access to
information often drive informality
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MSMES ESPECIALLY THOSE IN RURAL
AREAS DO NOT HAVE ACCESS TO
BASIC INFASTRUCTURE
• Lack of available water and electricity makes
farmers dependent on rain
• Basic infrastructure for agro-processing is
missing
• Other than cell phones, few MSME owners
have access to information and
communications (ICT) infrastructure
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Whereas most large enterprises have connections to
infrastructure services, most MSMEs do not
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