Lusaka, 17th August 2021: Value addition describes the process of economic transformation provided to a product or service before it is offered to customers which results in a higher net worth. The challenge, however, to adding value and boosting domestic productive capacity for a country like Zambia that is commodity-dependent, makes it vulnerable to commodity-price fluctuations. Commodity price cycles impact economic growth through several channels, including price volatility and declining terms of trade in the long run, which results in revenue erosion. Such a reduction limits capacity to fund development projects, thereby affecting the ability to grow and advance human development. This also induces high budget deficits (when export revenues decline), exchange rate fluctuations and ultimately, unsustainable debt.
