INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT DEVELOPMENT ECONOMICS DEPARTMENT Public Disclosure Authorized URBAN AND REGIONAL ECONOMICS DIVISION URBAN AND REGIONAL PAPER NO.74-1 Public Disclosure Authorized THE DEVELOPMENT OF REGIONAL CENTERS - ZAMBIA JOHN C. ENGLISH February 1974 Public Disclosure Authorized This paper is prepared as Annex II to the Urban Sector Survey Report - Repul-lic of Zambia Report No.490-ZA Confidential Public Disclosure Authorized Table of Contents THE DEVELOPMENT OF REGIONAL CENTERS A. Regional Growth and Urban Development 1. Introduction 2. Structure of the Economy 3. Spatial Consequences 4. Public Investment in First and Second Plans 5. Decentralization of Manufacturing 6. Potential Impact on Distribution of Urban Growth B. Chipata and Eastern Province 1. Existing Characteristics of Chipata 2. Developments in Eastern Province 3. Future Growth in Chipata 4. Other Urban Centers in the Province Table 1 - Gross Domestic Product by Kind of Economic Activity at Current Purchasers Values (K million) 2 - Percentage Distribution of Sales by Sections of Purchase - 1969 3 - Distribution of Imports by Origin, Grouped Sectors - 1969 4 - Zambia - Distribution of Imported Inputs by Sector - 1969 5 - Employment by Province and Sector, 1968 6 - Distribution of Manufacturing Establishments among Provinces by Manufacturing Activity 1969 7 - Average Agricultural Crop Production by Province 1969-72 8 - Zambia - Proportion of Population Aged 10-14 Enrolled in Primary School by Province 1972 9 - Zambia. Distribution of Primary School Pupils by Age Group and Province 1972 (Percentage) 10 - Distribution of Capital Expenditure in the FNDP 11 - Zambia - Hospital Beds by Province, 1973 and 1981 12 - Results of the Model (Input-Output Model Without Substitution of Imports) Changes in Output by Sectors 1967-1976 13 - Computed Growth of Total Production by Sectors 1971-1976 14 - Labor Output Ratio, Capital Output Ratio, and Labor Intensity by Sectors 1967 15 - Synopsis of Possible Projects Suggested for Southern Region 16 - Employees in Major Zambian Towne by Main Activity Groups, 1961 17 - Marketings of Major Agricultural Products 1970-71 18 - Eastern Province - Agricultural Marketings 1964-1972 ANNEX II Page 1 THE DEVELOPMENT OF REGIONAL CENTERS A. Regional Growth and Urban Development 1. Introduction 1. The economic development of Zambia has been based upon the exploita- tion of its mineral ores. As discussed in Annex I, during the colonial period significant numbers of mainly British workers entered the country to run the copper mines and their supporting activities including public administration. The location of the major mineral deposits and the construction of the main railway line south to link with Rhodesian and South African systems resulted in the main concentration of these activities in the central corridor of the country, commonly referred to as the "Line-of-Rail." 2. The economy has diversified in the past 20 years and particular since Independence there has been a considerable increase in manufacturing. However, it still remains dominated by mineral production. Table 1 shows the estimated gross domestic product for 1972 by sector. In that year mining and quarrying was estimated to comprise almost 25 percent of G.D.P. This represented a considerable decline from almost 50 percent in 1969 and resulted from reduced prices for copper and the major accident at Mufulira mine which reduced output sharply. 3. The overwhelming majority of the monetary value of the nation's product is clearly contributed by modern sector activities. Subsistence agri- culture is estimated to amount to six percent of the total, and some proportion of construction and trade are of a subsistence nature, but in total this is not likely to comprise much more than 10 percent of total economic activity. This annex examines first the structure of the Zambian economy with particular reference to the potential for decentralizing modern sector activities. The second section reviews the current position of one of the provincial capitals, Chipata, existing agricultural output in Eastern Province and prospective developments. The consequences of agricultural developments for urban develop- ment are discussed and future housing and infrastructure requirements of Chipata and other small urban centers in the Province assessed. 2. Structure of the Economy 4. Some indication of the structure of the economy can be obtained from examination of the national input-output table. Tables 2 and 3 summarize the major elements of the 1969 Table prepared by the Central Statistical Office. On the sales side the only sector with a major component of export sales is metal mining, in which 94 percent of sales are for export. The only other sectors with more than 10 percent export receipts are rail and other transport, hotels and "other manufactures." Much of the manufacturing sector is oriented towards private consumption, i.e. food industries and textiles, ANNEX II Page 2 with 70 percent or more of sales being for consumption purposes. The oth'er segments of manufactures are more dependent on sales to intermediate sectors. These are fairly widely spread. Sales to mining are significant for chemical and machinery sectors. The only instances in which sales between manufacturing sectors exceed 20 percent of sales (including sales to the same sector) are for Paper, Paper Products, Printing and Publishing, which has significant internal sales, and Basic Metal Manufactures, which provides inputs for the Fabricated Products and Machinery sector. 5. Table 3 snows the distribution of inputs by origin for broad sectors. Excluding private consumption and metal mining all sectors obtained more than twice the proportion of inputs from imports than from the domestic manu- facturing sector. Also in all sectors except agriculture, private services comprised a larger proportion of inputs than domestic manufactured goods. The sectoral origin of.imports is shown in Table 4. In four of the manufacturing sectors over 90 percent of imports were from the same sector, Textiles, Paper, etc., Chemicals and Petroleum Products, and Basic Metal Products. In two other raw materials for components are clearly dominant, Rubber Products and Fabricated Products, Machinery and Equipment. Generally internal intersectoral transactions of these types were rare. 6. Thus the manufacturing sector in 1969 was heavily oriented towards transformation of imported materials or components for direct sale to the final user. At the same time, domestic service inputs were more significant than material inputs. These facts indicate a sector highly oriented towards its markets and its service requirements. The resulting tendency to concen- tration was strengthened in the Zambian case by the fact that markets were dominated by expatriate groups in the cities who demanded a high standard of goods and services. This in turn required that those activities supplying this market required a similar high level of inputs which, on the personnel side, were only available in the cities. This basic situation continuAes. As Zambian industry expands it may to some degree be enhanced since new internal suppliers attempting to become established will wish to maintain close links with their markets. In many cases customer relationships may be a major factor in promoting establishment of the business. In such circumstances there would be a reluctance to locate at a distance from these markets. 3. Spatial Consequences 7. The result of these forces has been a concentration of activity both sectorally and spatially: a limited range of activities are located in a few urban areas. The extent of this concentration, especially in private sector activities is indicated in Table 5, which shows the numbers employed in 1968 by sector and province. In that year 85 percent of private sector employment was located in Central and 'Copperbelt provinces. If the Southern province (the third line-of-rail province) is included, this proportion rises 95 to percent, compared to the three provinces' population share of 52 per- cent in 1969. The heavy concentration of private sector employment in these provinces is consistent throughout all sectors. In manufacturing, the only ANNEX II Page 3 activities reported off the line-of-rail were some small food vnd textile activies (see Table 6). There is some concentration of public sector employ- ment in these three provinces also with 65 percent of the total being located there (63 percent of central government employment and 92 percent of that of the public corporations). 8. The spatial concentration of private sector employment has resulted in a marked contrast in the structure of employment between the line-of-rail and non-line-of-rail provinces. Thus, the private sector accounted for 70 percent of reported wage employment in the line of rail provinces, compared to only 28 percent in Eastern Province and less than 25 percent in the other four provinces. The ratio of the 1968 reported employment to the number of persons per province who reported themselves to be working in the 1969 census, gives a relative indication of the importance of the formal sector in the different provinces. Around 80 percent or more of those engaged in economic activity in the non line-of-rail provinces were in the informal sectors. Figures are not available on the breakdown of this informal sector labour force between sectors - e.g. agriculture, distribution, construction; but it is clear that the majority of these persons