This Constraints Analysis (CA) fulfils a requirement of the Millennium Challenge Corporation (MCC) for Compact-Funding for which Zambia became eligible on 12th December 2008. This CA utilises the framework provided by Hausmann, Rodrik and Velasco (HRV) (2005) as modified by the World Bank in its 2008 study – What are the Constraints to Inclusive Growth in Zambia? The IG study approach had the advantage over the traditional CA approach that it attempted to uncover why, despite strong growth in Zambia over the past decade, this had not translated into significant poverty reduction. This is a key question in the Zambian situation. The IG study had to be further augmented with a more detailed Business Environment and Employability Analysis using more recent data. This CA therefore updates the materials contained in the World Bank’s IG Study. This CA therefore focused on two key questions:
1. Why has Zambia’s GDP per capita not accelerated and attained the levels achieved in the first ten years of independence? and 2. What is constraining more inclusive growth and significant poverty reduction? This CA found many reasons why growth has neither been inclusive nor has occurred at the rate anticipated in the FNDP. Four of these reasons are adjudged to be binding constraints, including Low Quality of Human Capital, Poor Infrastructure Services, and Coordination Failures.