The role of the construction sector in influencing natural resource use, structural change, and industrial development in Zambia

Abstract

The construction sector plays a critical role in delivering quality infrastructure, which in turn influences the use of natural resource revenues towards achieving structural change and industrial development. We use industrial organization and political economy lenses to describe and understand the organization of and changes in the construction industry in Zambia, focusing on demand-side factors; supply-side issues; market interactions through pricing and costs; and public institutions, regulations, policies, and structures. We establish the main firm-level, industry-wide, and macroeconomic bottlenecks affecting Zambia's construction sector and offer options for dealing with the key bottlenecks. In particular, we suggest: institutional reforms and legal and regulatory changes governing procurement and contracting rules and systems; training and other capacity-building programmes; greater access for local contractors to existing financing sources, including the Skill Development Levy; a review and update of the local content and subcontracting strategy and policy; and state-supported and -financed/-resourced research and development programmes.