A Review of Import Substitution Industrialisation (ISI) Policy in Selected Industries in Zambia, 1964 – 1991

Abstract

In 1964, Zambia’s economy relied heavily on copper mining and imports from Southern Rhodesia (SR) with a negligible manufacturing sector. The United National Independence Party (UNIP) government sought to rectify this imbalance by implementing an import substitution industrialisation (ISI) policy to diversify the economy into manufacturing and agriculture. The Industrial Development Corporation (INDECO) was established in 1965 to support this diversification. Initially, ISI was led by the private sector, 1964-1970 and later by the government, 1971-1991. While many studies argue that manufacturing industries established during this period were dependent on imports and lacked foreign exchange, this article argues that significant strides were made in ISI across certain sectors of production. Some companies in the manufacturing sector adapted foreign technologies, fabricated spare parts for machinery and utilised locally sourced raw materials, thereby reducing their dependence on imports. The government managed foreign exchange judiciously, incentivised industries and devalued the currency to promote domestic production. Export promotion of non-traditional goods was encouraged to earn foreign exchange, leading to a shift by 1991 towards importing capital goods, necessary for expanding the consumer goods industrial base.