Recently a number of sentiments have been passed by political and economic commentators – and policy makers – seemingly expressing displeasure at the increasing number of shopping malls in Zambia, with most of these malls owned by South African multi-national chain stores. The complaints have ranged from those arguing that they promote a culture of consumerism and love for foreign goods at the expense of local goods, to the infant industry argument that the shopping malls promote foreign (South African) goods at the expense of locally produced goods.
In supporting its infant industry argument, the government of Zambia in March 2017 banned the importation of fruits and vegetables which are mostly sold in the multi-national chain stores. This delighted local farmers while seemingly inconveniencing the chain stores who have long argued that local Zambian food suppliers have failed to consistently supply their chain stores with products of the right quality at the right price and the right time. Consequently, most multinational chain stores have opted to source their products directly from South Africa.
With all this happening, there seems to be no argument being made for the obvious economic benefits that shopping malls are bringing to the Zambian economy. One of the most revealing characteristics of rising incomes in a country is the increase in the number of options from which people can buy from, as well as an increase in the variety of goods and services available to people.
Shopping malls are essentially creating ‘choice’ – not only where people can buy from, but also widening the range of commodities they can buy. As standard economic theory would predict, as people’s incomes rise, among others, they increase their demand and expand their choice – variety; quality and importantly, convenience. These three traits of consumer demand– variety, quality and convenience – largely explain the increase in the number of shopping malls Zambia, particularly Lusaka, is experiencing.
Just in the last one year, we have seen a surge in the number of malls, and of course mostly foreign owned to house multi-national chain stores. The location of these malls has now moved from the traditional Central Business District to residential middle to high income areas of the city. The need to set up such malls is so great that there was controversy around building a mall at one of the grounds for a girls’ secondary school in Lusaka. This raised alarm, with people saying that it is not good for the country.
So, are malls good for our economy even when we do not produce enough to supply them?
Yes, and below I argue why.
Firstly, let us recognise that any investor setting up a mall injects into that project a significant amount of money. Such an investment is only initiated if and only if there are viable returns to it. So that said, the increase in demand for variety, quality and convenience can only explain one thing:
Zambians have more money in their pockets!
Until recently, Zambia had seen a considerable rise in a middle class – the working-class population & the entrepreneurs. Coupled with high levels of urbanisation, the demand for retail outlets through malls to meet the demands of the new ‘modern’ consumer has increased. Certainly, the higher levels of consumerism by the middle class – who want to buy designer goods and eat from known restaurants – has created the impetus for the construction of malls.
So as a sign of rising incomes and higher standards of living, the increase in shopping malls is certainly a good thing for the Zambian consumer.
Secondly, and importantly, shopping malls provide an opportunity for local supplies to have their products in readily available outlets. Malls have to be filled with goods – both local and international. As the target market for most malls is the high-end consumers, this provides an opportunity for local manufacturers and farmers to enhance their productive capabilities to supply – at the right quality, quantity and price. This does not only provide ready incomes from a ready and steady market, but it further creates an opportunity for innovation to grow local firms. Before shopping malls, most farm produce would be sold on open markets at very low prices. This made investment in farming by local entrepreneurs a not so attractive venture. The rise in the number of malls has, however, created a high-end market for such investments.
In addition to agricultural goods, malls need manufactured goods too. While the bulk of manufactured goods come from South Africa, there is certainly a vacuum that can be filled by locally manufactured products. Competition in manufacturing will create the need for local manufacturers to increase their product quality and enhance consistency in supply. This move would promote diversification and industrialisation – two very elusive policy goals for Zambia since independence in 1964! In this case, rather than seeing imported goods as an interference in the growth of local firms, local manufacturing firms should see this as an opportunity to compete on quality and price. With the Ministry of Commerce’s ‘Buy Zambian’ campaign, there is certainly good to be had in appreciating the rise of shopping malls in the country.
Thirdly, we should not ignore the employment generation potential of shopping malls. Unlike the traditional owned shops which employ a limited number of family members – a characteristic of most local retailers – retail giants that are setting up in Zambia employ a bulk of the local workforce therefore contributing to employment creation. Further, depending on the incentives agreed by government by mall developers, government benefits from tax contributions.
Fourthly and finally, the development of malls is changing the face of the city from a dirty murky city – with structures such these – to a clean, secure, convenient and beautiful city. Levy Mall is a clear example. The construction of Levy Mall transformed the place from a disorganised business ramshackle to an ultra-modern business park.
With the above, let us celebrate our changing tastes and preferences for a more convenient lifestyle that is being satisfied by shopping malls.by