Industrial Spillovers and the Design of Private Enterprise Industrial Clusters in Zambia

The Zambian government has long been seeking to stimulate local production, particularly in the non-mining sectors. As a stimulus, the government has launched the Industrial Clusters Development Programme (ICDP) – a program that aims to create at least one industrial cluster per administrative district. The idea behind these industrial clusters is that they will act as ‘centres for excellence’ for industrial proximity, supporting skilled entrepreneurs that may be technologically and/or credit constrained, thus failing to cater to larger demand. These clusters are also expected to help SMEs exploit local spillovers and generate increasing returns through larger demand-supply networks. This study will provide empirical knowledge on the existence, nature, and extent of spillovers within sectors, products, and/or geographical spaces such as administrative districts, as well as investigate the link to productivity.

To provide this empirical evidence, the researchers will utilize confidential Economic Census Data collected by the Central Statistical Office in Zambia that canvassed all formally registered enterprises in Zambia between 2011 and 2012 and drew a careful representative sample of informal microenterprises. The first objective of this study is to measure the existence of agglomeration across physical geographical space within administrative district boundaries and provincial boundaries. The next will be to measure agglomeration at the industrial sector space and product distance space, within manufacturing activities.  

Results from the study will provide insights into how the design of these industrial clusters as part of the ICDP can be optimized going forward. Specifically, it can shed light on whether cluster design should target physical geographical distance or other ‘distances’ such as product activities or networks, providing valuable information to the Ministry of Commerce, Trade, and Industry. 


Chrispin Mphuka

University of Zambia

Joseph Simumba

Zambia Institute for Policy Analysis and Research