COVID-19 and the challenge of developing productive capacities in Zambia

UNCTAD Research Paper No. 63

The COVID-19 pandemic has tested the resilience of the Zambian economy and is exacerbating the development challenges confronting it. As a result of the pandemic, real output declined by 4.5% in 2020. This is a very significant and worrisome development because it is the first time the economy has experienced a negative growth rate since 1998.

Since the onset of the pandemic, a plethora of studies have been carried out to examine the impact of the crisis on macroeconomic variables such as employment, output and poverty. But there have been no systematic studies on how it is affecting the development of productive capacities in Zambia, which is essential for sustained and inclusive recovery.

The paper focuses on this neglected aspect of the economic consequences of the pandemic in Zambia. It identifies channels through which the pandemic has had a negative impact on the use of existing productive capacities and on the creation of new ones. It also discusses policy measures that the Government should consider adopting to strengthen efforts to foster productive transformation and build resilience to shocks.