A modelling of Zambia’s manufacturing finance.
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Date
2025
Authors
Ng’ambi, Wiza
Journal Title
Journal ISSN
Volume Title
Publisher
The University of Zambia
Abstract
This study aims to investigate Zambia’s manufacturing finance, drawing lessons from Newly Industrialised Countries (NICs), with a view to generate policy prescriptions that may navigate Zambia’s manufacturing finance to its optimal level. The study has four objectives: to determine the NICs on which Zambia’s manufacturing finance may be benchmarked, to benchmark Zambia against these NICs, to model Zambia based on NIC models and to optimise Zambia’s demand and supply of manufacturing finance. It pursues a mixed method study composed of benchmarking, modelling and optimisation: applying relative value analysis, data envelopment analysis, structural equation modelling and multi-objective particle swarm optimisation with crowding distance on a firm- and country-level merged dataset from seven countries namely, India, Indonesia, Malaysia, Philippines, South Africa, South Korea, and Zambia. The study shows that manufacturing finance is a necessary condition for manufacturing development, which itself is an engine for economic growth. It demonstrates that manufacturing finance has strong linkages with other dimensions of the economy including the financial, legal, and political systems. At the aggregate, the study shows that while NICs such as South Korea evolved their developmental state into industrial states through instituting effective developmental structures and playing active developmental roles, Zambia did not advance to such an industrial state, as evidenced by the deficient manufacturing finance and correspondingly stagnated manufacturing development. The study statistically shows that Zambian manufacturing firms’ access to finance is on the tail end of the study countries, even
when only efficient firms are considered. It shows that high cost of capital, unfavourable legal climate, taxation constraints, firm size distribution, firm financial inefficiency, low firm formalization, low technology intensity, import dependence and predominance of domestic sales in Zambia negatively affect manufacturing firm access to finance. It further highlights deficiencies in the composition of manufacturing firm ownership in Zambia and the utilisation of foreign aid. The study demonstrates that similarities and differences exist between NIC and Zambian firms, and across NICs; showing variations in variable effects across contexts owing to varying political and economic conditions. While acknowledging that NICs carry the more efficient and effective manufacturing finance models, the study argues that effective policy learning requires further analyses into the functional level variations in the learning and exemplar countries. This study shows that beyond generic recommendations about how developing countries can emulate NIC manufacturing finance policy, analysis needs to offer wholistic and quantified policy options to be effective. This approach allows consideration of related policy interests and helps assess the costs and benefits of competing policy options. The study demonstrates that, holding exogenous factors such as manufacturing output constant, Zambia’s prevailing manufacturing finance is below its potential. This implies that a reconfiguration on the input side may yield better outcomes, with positive ramifications on manufacturing development.
Key Words: Manufacturing, Finance, Modelling, Zambia, Newly Industrialised Countries
Description
Thesis of Doctor of Philosophy in Business and Management.