The role of state - business relations in the performance of Zambia's food processing sub-sector

In ensuring growth and development collaborative State-Business relations(SBRs) matters, and with economic growth comes increasing levels of employment,options for poverty reduction and hence more equitable development.Whereas it is known that SBR matters at a macro-economic level, the concept ofSBR has also been employed in a more or less all-encompassing way in the literature.Accordingly, while it is clear that SBRs work, there is lack knowledge aboutwhich dimensions of SBRs are the most important. Due to the continued importanceof agriculture in many developing countries, processing of the food producedin the sector is a key manufacturing activity of high economic importanceto many economies. Ensuring collaborative SBRs in the food processing industryis therefore of interest to growth and development, particularly as it is a sectorabout which little is known about the role of SBRs. The paper attempts toexamine how and why SBRs matter to and influence the growth and performanceof local owned firms in the food processing sub-sector in Zambia. In particular,the paper analyses the roles and influence of government regulations andpolicies compared to those of business associations for the performance of thefood processing sector in Zambia. The paper draws on primary data from a surveyof firms in the food processing sector which was conducted between 2013and 2014. It is shown that while the majority of the Zambian food processingfirms experienced growth over the last five years, with increased employment andin a number of cases growing earnings, this seems to have happened in spite ofa business environment which is not particularly supportive. The firms’ experienceis that the SBRs mainly constitute institutional barriers to the performanceof firms and highlight that formal government institutions and polices are incapableof assisting the firms and in most cases government institutions formulateand enact insufficient support schemes.