By Steven Mbangu
Zambia’s economy has largely grown through foreign direct investment (FDI), public spending, and other capital inflows. Yet most citizens remain engaged only as workers, informal traders, or survivalist entrepreneurs, with little ownership of the assets being created.
The 2024 Labour Force Survey shows 74.2% of employed persons are informally employed, underscoring the need for strategies that move people from survival incomes to asset ownership and resilient intergenerational wealth.
Financial inclusion rose from 59.3% in 2015 to 69.4% in 2020, with a target of 85% by 2028. Yet households remain dependent on wages or uncertain informal earnings.
These statistics demonstrate that GDP growth can be detached from ordinary lives, and that financial inclusion alone does not guarantee citizen participation in the capital base. True empowerment requires converting incomes—whether wages, trading, or self-employment—into savings, aggregated capital, and ownership.
TWO PATHWAYS OF CITIZEN PARTICIPATION
1. The Conventional model:
- capital → investment → jobs → income → consumption → GDP growth.
2. The inclusive model:
- capital → investment → jobs → income → savings → aggregation → citizen ownership → capital income → reinvestment → wealth.
The second pathway extends the first, recognising irregular incomes and informal activity. International precedent reinforces this: OECD pension systems show how small contributions, when pooled, have grown into over US$56 trillion in global assets, while World Bank pooled investment vehicles demonstrate how collective structures can finance infrastructure and long-term projects. Zambia must adapt this logic to include informal and irregular earners, ensuring broad participation in the country’s capital base.
INSTITUTIONAL GAPS
Existing institutions—banks, pensions, unit trusts, cooperatives, empowerment programmes—do not connect small citizen savings to diversified ownership.
Pensions exclude informal earners; capital markets remain inaccessible to most low-income citizens; the bulk of empowerment programmes that are intended to support enterprises fail to create broad-based ownership.
Informal savings groups (chilimba), which are organic and much closer to communities, show capacity to save but remain disconnected from national capital markets. The ILO research in Uganda and India confirms that such informal mechanisms mobilise savings effectively, but without institutional bridges they remain short-term and vulnerable.
To solve this, bridging informal chilimbas into CCFs offers a natural pathway to national pension reform. By aligning these vehicles with National Pension Scheme Authority (NAPSA) frameworks and SEC collective investment guidelines, Zambia can effectively establish a voluntary, mobile-driven Tier-3 micro-pension pillar tailored specifically for the informal economy.
PROPOSITION OF CITIZEN CAPITAL FUNDS
The missing bridge is Citizen Capital Funds (CCFs) — regulated vehicles aggregating small contributions (K20, K50, K100) via mobile money or community channels. If these are created and professionally managed, they would enable broader reach to ordinary individuals to co-invest in mining, energy, agriculture, housing, and infrastructure, support MSMEs through Enterprise Graduation Scale-Up (EGS-UP), and recycle returns into citizen wealth.
Scale is achievable: one million citizens contributing K50/month = K600 million annually.
With appropriately structured risk-sharing mechanisms—including catalytic and first-loss capital from government and DFIs, the model becomes a resilient tool of broad based empowerment. This mirrors World Bank recommendations on credit enhancement and risk mitigation for pooled vehicles.
Flexible contributions, tiered portfolios, and mobile-first access would make broad-based participation viable.
Recognizing that informal and low-income earners require financial flexibility for sudden life events, CCFs should feature a tiered capital structure. A portion of contributions is allocated to a high-liquidity short-term buffer for emergency withdrawals, while the core balance is committed to long-term, high-yield asset accumulation.
Strong governance and transparency are essential safeguards.
To guarantee absolute integrity and insulate citizen capital from political interference or misallocation, CCFs must operate under strict fiduciary governance frameworks. This includes custodian bank isolation of assets, independent professional fund managers, real-time Securities and Exchange Commission (SEC) oversight, and transparent, mobile-accessible digital ledgers that give every contributor full visibility over their ownership stake.
REDEFINING GOVERNMENT’S ROLE (CATALYTIC CAPITALISATION OF COMMUNITY BASED LINKAGES)
Government should gradually begin to move beyond short-term grants that perpetuate dependency, toward enabling citizen ownership.
Seed institutions and provincial trusts can mobilise local savings; co-investment frameworks can connect citizens to strategic projects; tax incentives can encourage long-term citizen capital formation. Linking citizen savings to MSME development ensures survivalist enterprises can graduate into scalable businesses, while collective ownership allows even non-entrepreneurs to build wealth. Importantly, as OECD guidance stresses, not every citizen needs to be an entrepreneur to become an asset owner.
Furthermore, the Government can enhance CCF credibility by providing inflation-indexed sovereign yield backing and blended risk-sharing facilities for the funds’ base fixed-income allocations. By pairing guaranteed inflation-adjusted returns on baseline reserves with high-growth investments in key productive sectors, the state lowers downside risk while safeguarding the real purchasing power of citizens’ hard-earned capital against inflationary erosion.
MEASURING SUCCESS
Indicators should track:
- citizen equity
- ownership
- mobilised capital
- participation rates
- enterprise graduation
- capital income distribution
- household wealth accumulation
- intergenerational asset transfer
True success lies not in disbursement of grants but in citizens becoming enduring net owners of productive capital. Grants should remain temporary cushions while permanent, resilient measures take root.
CONCLUSION
Zambia’s challenge is not only attracting investment but ensuring citizens broadly participate in ownership of the capital base being formed.
By supporting broader community-based aggregation of small savings, embedding risk-sharing mechanisms, and creating structured opportunities, Zambia can transform survivalist participants into savers, investors, and asset owners. The ambition should be to shift citizens from daily survival or wage dependency to a pathway of saving, aggregation, ownership, capital income, reinvestment, and the creation of enduring intergenerational wealth.
Government holds the key by creating and implementing policies and instruments that provide Catalytic Seed Capital to provincial institutions that aggregate millions of small savers into meaningful participation in national capital formation.
Selected Evidence Base
- World Bank — pooled investment vehicles, infrastructure investment, risk mitigation and institutional capital mobilisation.
- ILO Recommendation No. 204 — inclusive financial services, enterprise development and support for the informal economy.
- OECD, Pensions Outlook 2024 — pooled long-term savings, institutional investment, inclusion and self-employed participation.
- ILO, The Importance of Informal Finance in Promoting Decent Work among Informal Operators — community savings, ROSCAs/ASCAs and informal financial intermediation.
- Zambia Statistics Agency, 2024 Labour Force Survey — informal/formal employment structure.
- Bank of Zambia, National Financial Inclusion Strategy II (2024–2028) — financial inclusion, underserved populations, MSMEs and digital financial services.
- Securities and Exchange Commission Zambia — regulatory framework for collective investment schemes and capital-market intermediaries.
