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The Republic of Zambia Diagnostic Trade Integration Study (Dtis)

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The Republic of Zambia Diagnostic Trade Integration Study (Dtis) The World Bank Group THE REPUBLIC OF ZAMBIA DIAGNOSTIC TRADE INTEGRATION STUDY (DTIS) Main Report Draft prepared for the Enhanced Integrated Framework Last Revision 10 June 2014 Republic of Zambia Diagnostic Trade Integration Study (DTIS) TABLE OF CONTENTS ACKNOWLEDGEMENTS ....................................................................................................................................... X EXECUTIVE SUMMARY ...................................................................................................................................... XI CHAPTER 1: TRADE, INCLUSIVE GROWTH, AND ECONOMIC DIVERSIFICATION ......................... 1 1. Introduction ..................................................................................................................................................... 1 2. Macroeconomic environment .......................................................................................................................... 1 3. How can trade help address Zambia’s diversification, inclusive growth and job-related challenges? ............ 5 4. What explains the limited contribution of trade to inclusive growth and job creation? .................................. 7 5. The Political Economy of the 2005 Action Matrix Implementation ............................................................. 10 6. Conclusion ..................................................................................................................................................... 12 CHAPTER 2: TRADE AND INVESTMENT PATTERNS AND POLICIES.................................................. 13 1. Trade and investment patterns ....................................................................................................................... 13 2. Product distribution and geographical orientation of Zambia’s Goods trade ................................................ 15 3. Trade in Services ........................................................................................................................................... 25 4. Foreign direct investment .............................................................................................................................. 33 CHAPTER 3: NON-TARIFF MEASURES ........................................................................................................ 35 1. Introduction ................................................................................................................................................... 35 2. Measures affecting imports ........................................................................................................................... 36 3. Measures affecting exports ............................................................................................................................ 40 4. Recommendations ......................................................................................................................................... 47 CHAPTER 4: TRADE IN AGRICULTURE ...................................................................................................... 49 1. Introduction ................................................................................................................................................... 49 2. Agriculture Trade Performance ..................................................................................................................... 50 3. Trade Management ........................................................................................................................................ 72 4. Case Study Examples of Actual trade Costs ................................................................................................. 81 5. Opportunities for Enhanced Trade Competitiveness ..................................................................................... 87 CHAPTER 5: INFORMAL CROSS-BORDER TRADE ................................................................................... 91 1. Background on informal cross-border trade .................................................................................................. 91 2. Magnitude and characteristics of small scale CBT between Zambia and its neighbors ................................ 94 3. Initiatives to formalize ICBT in Zambia and implementation challenges ..................................................... 98 4. Moving forward to facilitate small scale CBT ............................................................................................ 101 5. Conclusion ................................................................................................................................................... 106 CHAPTER 6: TRADE FACILITATION AND LOGISTICS.......................................................................... 107 1. Introduction ................................................................................................................................................. 107 2. Core Logistics Infrastructure and Services .................................................................................................. 109 3. Road Infrastructure and Trucking Services ................................................................................................. 110 4. Railways ...................................................................................................................................................... 113 5. Inland water transport .................................................................................................................................. 116 6. Air Transport Connectivity ......................................................................................................................... 118 7. Customs and Border Management .............................................................................................................. 119 ii 8. Clearing and Forwarding Industry ............................................................................................................... 123 9. Regional Connectivity ................................................................................................................................. 124 10. Zambia as a Regional Logistics Hub ........................................................................................................... 132 11. Regional Mechanisms for Trade Facilitation and Logistics ........................................................................ 133 12. Recommendations ....................................................................................................................................... 136 CHAPTER 7: SERVICES RELATED TO MINING ....................................................................................... 139 1. Introduction ................................................................................................................................................. 139 2. Upstream linkages: Definitions ................................................................................................................... 140 3. Background on Zambia’s local mining supply chain .................................................................................. 142 4. Trajectory of local service providers ........................................................................................................... 146 5. Policy and regulatory framework ................................................................................................................ 155 6. Conclusion and policy recommendations .................................................................................................... 158 CHAPTER 8: EDUCATION AND PROFESSIONAL SERVICES ................................................................ 164 1. Unleashing the Potential of Services for Zambia’s Growth and Export Diversification – a Case Study on Professional Services............................................................................................................................................. 164 2. Explaining the underdevelopment of professional services in Zambia ....................................................... 170 3. Recommendations for policy action ............................................................................................................ 179 4. Conclusion ................................................................................................................................................... 182 CHAPTER 9: TOURISM ................................................................................................................................... 183 1. Introduction ................................................................................................................................................. 183 2. Current contribution of the tourism industry ............................................................................................... 183 3. Zambia’s tourism assets and unrealized potential ....................................................................................... 186 4. Lifting the constraints to achieve the sector’s potential: ............................................................................. 188 5. Supply-side factors ...................................................................................................................................... 189 6. Demand-side factors ...................................................................................................................................
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