THE BEIJING AXIS just completed a southern African market entry project for a large foreign manufacturer, and if you would excuse me for just slightly taking the spotlight off China in this posting, I'm going to briefly look at the similarity of the sheer lack of diversity in the economies of Angola and Zambia. But of course, like almost everything else these days, you'll still see a lot on China below, I mean, how else?

If most people think Angola and Zambia today, they think oil and copper - there's just no two ways about it. Not least anyone in China, who is the largest consumer in the world of Angolan oil and the second-largest consumer of Zambian copper. To give you an idea of the sheer scale of Angola's 'only show in town,' in 2008 a full 98% of its exports consisted of mineral fuels, oil and products, and China was taking the largest share of Angola's exports (32% - mind you the US was not far behind at 29%). On the back of rising oil exports, Angola's economy has been riding a high wave since the end of its almost 30-year civil war in 2002, with average GDP growth of 13.4% between 2002 and 2009. Its no surprise then that Angola's one-horse economy suffered greatly in 2009 with the drop in commodity prices, and GDP growth for this year fell to about zero, yet growth is expected to return to 7-8% for 2010.

As another economy dominated by commodity exports, Zambia weathered the global financial crisis remarkably well. That Zambia could register 5.3% GDP growth in 2009 was mostly due to contributions from its wholesale and retail sector (which contributed 16.4% to GDP); agriculture, forestry and fishing (12.5%), and construction (11.4%). Indeed, strong contributions from sectors other than mining in 2009 illustrates the value for Zambia's economy in being a little more diversified than Angola's. In 2009, copper exports made up 67.5% of Zambia's total exports, and the only other significant category was ores, slag and ash, which constituted 11.2%. China was Zambia second-largest trade partner, consuming 11% of Zambian exports (interestingly enough, Switzerland was Zambia's largest trade partner, taking a full 48%).    

While Angola and Zambia have much in common in the way a single commodity dominates their economies, they also share the consequences of this lack of diversity. Outside Angola's oil sector and Zambia's copper industry, both countries face immense development challenges. One could say a lot more about developmental problems in these countries, but here I will focus only on transport infrastructure (and especially the lack of it). The following image can illustrate just how under-developed transport infrastructure in Angola and Zambia still is:

Attempting to break the stranglehold of oil, diamond mining is being encouraged in Angola, although the contribution of the mining sector is still only 5% of GDP. A range of exploration activities were cancelled in Angola in 2009, and foreign mining firms are purportedly having a hard time with bureaucratic hurdles and 'not knowing the right people' in Angola. The potential is there, however, and it is estimated that around 50% of Angola's confirmed diamond reserves have not been touched yet. As things stand, Angola does produce 7-9% of the world's diamonds. Yet Angola is still 169th on the World Bank's Ease of Doing Business ranking, and in the Trading Across Borders sub-section it is ranked 171st. 

Exploration is ongoing in Zambia for minerals other than copper, like gemstones, gold and nickel, and Zambia's government has proclaimed its Fifth National Development Programme with which it aims to turn Zambia into a middle-income country by 2030. The programme focuses on poverty reduction as well as health, education and infrastructure, yet spending for the plan is likely to keep Zambia dependent on foreign loans and aid over the near term. For the time being, however, subsistence farming remains the largest source of jobs in Zambia. 

For Angola and Zambia to comprehensively escape the problems of long-standing under-development, the answer will have to come from oil and copper AND something else, although in both cases it is not quite certain exactly what yet. In the meantime, a few more railways should surely help matters along.