ZAMBIA DEVELOPMENT AND INVESTMENT OPPORTUNITIES
MINING
Zambia has an abundance of known mineral deposits. The country is the world’s fourth largest producer of copper and holds six percent of the world’s known reserves thereof. Copper and cobalt, as the country's traditional exports account for well over 70 percent of export earnings. Opportunities for the exploitation of other minerals have been identified. These ince gold and gemstones (eg emeralds, aquamarine, topaz, opal, agate and amethysts). Diamond reserves have also been identified. Zambia produces over 20% of the world’s emeralds.
The mining sector contributes an average of 8.5 percent of GDP and contributed 11.8 percent to GDP in 2008 compared to a growth of 7.7% in 2003. However growth prospects for the mining industry may not be favourable due to the reduction in global commodity prices after the global financial crisis. This has affected demand for commodity goods, reflected in the reduction in prices on the international market. Being a major copper producer, Zambia has been affected by the reduction in copper prices.
AGRICULTURE
Government regards the growth of the agricultural sector as a crucial element in enhancing Zambia’s foreign exchange earnings and economic development. Although the agricultural sector employs more than half of the total labour force, only 15 percent of the arable land is under cultivation. It is because of this potential that the government encourages investment in commercial farming. As the country is looking to diversify the economy away from copper, sectors such as agriculture appear promising due to the natural potential the country has in agriculture production, which has not been fully exploited over the years.
Currently, the agriculture sector contributes an average of 13.3% to GDP, but has been performing poorly in recent years due to high input costs, inadequate infrastructure and low private investment in the sector. However to turn this around, the Government has in the 2009 Budget, increased its allocation of funding to the sector to address some of these constraints.
MANUFACTURING
The government is continually introducing policies to stimulate economic growth and specifically in the manufacturing sector. The main emphasis has been on food processing and textile production. The growth potential in other industries is vast. Support measures designed to aid manufacturing enterprises in non-traditional sectors are being implemented.
The largest contribution came from the Food, Beverages and Tobacco sub-sector. The Government has been working at expanding the country’s manufacturing base by reducing the cost of doing business through various initiatives. Currently, the Government is promoting the establishment of Multi-Facility Economic Zones (MFEZ) by providing fiscal incentives, quality infrastructure and a conducive regulatory environment to developers of these zones.
TOURISM
There is a vast potential in the tourism sector in Zambia, with its natural beauty (including the Victoria Falls, which is one of the most renowned beautiful transcendental Seven Natural Wonders of the World) and the wealth of wildlife have yet to be fully exploited. Zambia has 19 national parks and 34 game management areas with a total of 65,000 square kilometer set aside for wildlife conservation.
The main constraints facing the tourism industry include relatively underdeveloped infrastructure as well as inadequate supply of competitive accommodation. This is one of the areas that offer great potential to investors. The tourism industry has grown over the years. Increasing interest from foreign investors is evident with the establishment of hotels in the major tourist town of Livingstone, the capital city of Lusaka, Mfuwe, Kasaba Bay and other key tourist destinations.
ABUNDANT WATER
Zambia has an abundant supply of reliable water, with 45 percent of the total water resources of the Southern African Region found in Zambia, thus providing massive investment opportunities for hydro-electric power, irrigated agriculture, home and industrial use (through the Build Operate, Build Own Operate & Transfer schemes). In areas where surface water is inadequate, underground water resources are used at no great cost.
INFRASTRUCTURE
ROAD NETWORK
The Government of Zambia has embarked on the process of rehabilitating the road network, which covers 38,763 km of which 6,173 km are bitumen, 8,592 km gravel and 23,998 km is unclassified. A five and ten year Road Sector Investment Programme, estimated at U S $ 411.9 million and U S $ 860.3 million respectively, has continued to generate interest from the multilateral and bilateral agencies as well as the private sector.
RAIL NETWORK
Rail network remains the dominant mode of transportation (83.4%) for goods on the local and international routes. However, the infrastructure requires urgent rehabilitation, and with the support from Donors, the formerly state-owned Zambia Railways was privatized through a 25-year concession to Railway Systems of Zambia. Another major rail line links Zambia with Tanzania, is jointly owned by the Zambian and Tanzanian governments and is run by Tanzania-Zambia Railway Authority (TAZARA). The Chipata-Mchinji Railway is under construction and will link Zambia with Malawi and Mozambique.
AIRPORTS
Zambia has more than 130 airfields, one third of which are Government-owned while the rest are privately owned. The Kenneth Kaunda International Airport in Lusaka and Harry Mwaanga Nkumbula International Airports in Livingstone are Zambia’s main airports connecting the country with the region and the rest of the world. Other international airports include Simon Mwansa Kapwepwe in Ndola in the Copperbelt Province and Mfuwe in the Luangwa National Park in Eastern Province.
ENERGY
With its vast water resources and coal reserves, Zambia offers abundant investment opportunities for hydroelectric power generation, supply and distribution. The country has well over 1,750 MW of hydroelectric generating capacity. Proven coal reserves exceed 30 million tonnes and satisfy 9% of energy demand. The sector is regulated by the Energy Regulations Board, a statutory body established by an Act of Parliament. Hydro-electricity is mainly supplied and distributed by the Zambia Electricity Supply Corporation (ZESCO) – a statutory body whose operations were commercialized in 2006. The country's only major energy import is petroleum, which satisfies 12% of total energy demand.
TELECOMMUNICATIONS
Zambia is a member of INTELSAT and accesses an earth satellite station, which provides telex, telephone (direct-dial) and television links with the rest of the world. The country also enjoys state-of the-art electronic mail and Internet facilities. The sector is regulated by the Communications Authority of Zambia, another statutory body established by an Act of Parliament. Over 97 percent of the telephone exchanges are automatic. In the main urban centers public telephones and privately operated cellular telephone networks are in place. The Telecommunication infrastructure is relatively developed and the state-owned Zambia Telecommunications Company (ZAMTEL) is earmarked for commercialization. There are currently 3 companies providing mobile telephone services namely Zain, MTN and Cell-Z (a mobile segment of ZAMTEL).
HEALTH
Government and private hospitals and clinics provide health care. The private hospitals have earned a reputation as providers of good quality health care. Major surgery cases are usually referred to the Republic of South Africa. Flying doctor services cover remote areas and provide immediate care and transport for urgent cases. Investment opportunities for establishing specialized hospitals to treat such referral cases are, therefore, unexploited.
EDUCATION
Revitalization of the educational system is being accorded high priority especially in primary education. The Education Sector Investment Programme (ESIP) stresses the rehabilitation of educational facilities and improvement of the quality of education. There are currently three (3) public universities, some private universities and a good number of technical colleges, thus the massive investment opportunities for provision of university level and other tertiary education.
FINANCIAL SYSTEM AND THE CAPITAL MARKET
The financial system of the country is regulated by the Bank of Zambia, which is the country’s central bank. The main commercial banks are Barclays Bank Limited, Standard Chartered Bank Plc, Stanbic Bank Limited, Zambia National Commercial Bank Plc and Finance Bank Limited. The smaller banks include Indo-Zambia Bank Limited, Citibank Limited, Cavmont Capital Bank Limited, Invest Trust Bank Limited, Bank of China and Access Bank Zambia Limited. In addition to normal commercial banking, the sector is engaged in loan syndications. The capital market has, following the establishment of the Lusaka Stock Exchange (LuSE) and the repeal of the Exchange Control Act in 1994, boosted the financial system. There are currently 16 listed and 11 quoted companies on the LuSE.
ECONOMIC REVIEW
Government has continued to pursue liberalised market-led economic policies aimed at facilitating a private-sector-led economic development of the country. The Ministry of Finance formulates government's economic policy. The IMF prescribed Poverty Reduction and Growth Facility, which commenced in 1999, has continued to be implemented in order to improve the economic environment. Zambia reached the Highly Indebted Poor Country (HIPC) completion point in April 2005. Having attained the final stage of the HIPC process, the country has received substantial debt relief which has seen a reduction in Zambia's external debt stock. The total external debt stock, which was estimated at US$7.2 billion, reduced to US$1,093 million by end of 2008. Gross Domestic Product The economy registered a real gross domestic product (GDP) growth rate of 5.8 percent in 2008, down from 6.2 percent in 2007. Major primary contributors to GDP in 2008 were: agriculture (12.2%), construction (11.0%), manufacturing (10.1%) and mining (8.4%). Growth sectors presently being promoted by the Government comprise agriculture, manufacturing, mining, health, education, ICT and tourism sectors. Growth sectors have experienced exponential growth in recent years, and are expected to continue this trend in future due to the numerous investment opportunities currently available in Zambia.
FISCAL OUT TURN
Government's fiscal policy is focused on achieving a domestic budget surplus, through the continued adherence to a cash budget, improved revenue collection and strict control of expenditures. Other fiscal policy objectives are focussed at reducing public debt so as to increase liquidity available to the private sector for investment and increasing social sector expenditures in order to alleviate poverty.
ECONOMIC OUTLOOK
The prospects for continued economic growth look bright, given the enhanced investment in the mining sector and the anticipated increase in non-traditional exports, following government's ratification of the SADC Trade Protocol.
Zambia has an abundance of known mineral deposits. The country is the world’s fourth largest producer of copper and holds six percent of the world’s known reserves thereof. Copper and cobalt, as the country's traditional exports account for well over 70 percent of export earnings. Opportunities for the exploitation of other minerals have been identified. These ince gold and gemstones (eg emeralds, aquamarine, topaz, opal, agate and amethysts). Diamond reserves have also been identified. Zambia produces over 20% of the world’s emeralds.
The mining sector contributes an average of 8.5 percent of GDP and contributed 11.8 percent to GDP in 2008 compared to a growth of 7.7% in 2003. However growth prospects for the mining industry may not be favourable due to the reduction in global commodity prices after the global financial crisis. This has affected demand for commodity goods, reflected in the reduction in prices on the international market. Being a major copper producer, Zambia has been affected by the reduction in copper prices.
AGRICULTURE
Government regards the growth of the agricultural sector as a crucial element in enhancing Zambia’s foreign exchange earnings and economic development. Although the agricultural sector employs more than half of the total labour force, only 15 percent of the arable land is under cultivation. It is because of this potential that the government encourages investment in commercial farming. As the country is looking to diversify the economy away from copper, sectors such as agriculture appear promising due to the natural potential the country has in agriculture production, which has not been fully exploited over the years.
Currently, the agriculture sector contributes an average of 13.3% to GDP, but has been performing poorly in recent years due to high input costs, inadequate infrastructure and low private investment in the sector. However to turn this around, the Government has in the 2009 Budget, increased its allocation of funding to the sector to address some of these constraints.
MANUFACTURING
The government is continually introducing policies to stimulate economic growth and specifically in the manufacturing sector. The main emphasis has been on food processing and textile production. The growth potential in other industries is vast. Support measures designed to aid manufacturing enterprises in non-traditional sectors are being implemented.
The largest contribution came from the Food, Beverages and Tobacco sub-sector. The Government has been working at expanding the country’s manufacturing base by reducing the cost of doing business through various initiatives. Currently, the Government is promoting the establishment of Multi-Facility Economic Zones (MFEZ) by providing fiscal incentives, quality infrastructure and a conducive regulatory environment to developers of these zones.
TOURISM
There is a vast potential in the tourism sector in Zambia, with its natural beauty (including the Victoria Falls, which is one of the most renowned beautiful transcendental Seven Natural Wonders of the World) and the wealth of wildlife have yet to be fully exploited. Zambia has 19 national parks and 34 game management areas with a total of 65,000 square kilometer set aside for wildlife conservation.
The main constraints facing the tourism industry include relatively underdeveloped infrastructure as well as inadequate supply of competitive accommodation. This is one of the areas that offer great potential to investors. The tourism industry has grown over the years. Increasing interest from foreign investors is evident with the establishment of hotels in the major tourist town of Livingstone, the capital city of Lusaka, Mfuwe, Kasaba Bay and other key tourist destinations.
ABUNDANT WATER
Zambia has an abundant supply of reliable water, with 45 percent of the total water resources of the Southern African Region found in Zambia, thus providing massive investment opportunities for hydro-electric power, irrigated agriculture, home and industrial use (through the Build Operate, Build Own Operate & Transfer schemes). In areas where surface water is inadequate, underground water resources are used at no great cost.
INFRASTRUCTURE
ROAD NETWORK
The Government of Zambia has embarked on the process of rehabilitating the road network, which covers 38,763 km of which 6,173 km are bitumen, 8,592 km gravel and 23,998 km is unclassified. A five and ten year Road Sector Investment Programme, estimated at U S $ 411.9 million and U S $ 860.3 million respectively, has continued to generate interest from the multilateral and bilateral agencies as well as the private sector.
RAIL NETWORK
Rail network remains the dominant mode of transportation (83.4%) for goods on the local and international routes. However, the infrastructure requires urgent rehabilitation, and with the support from Donors, the formerly state-owned Zambia Railways was privatized through a 25-year concession to Railway Systems of Zambia. Another major rail line links Zambia with Tanzania, is jointly owned by the Zambian and Tanzanian governments and is run by Tanzania-Zambia Railway Authority (TAZARA). The Chipata-Mchinji Railway is under construction and will link Zambia with Malawi and Mozambique.
AIRPORTS
Zambia has more than 130 airfields, one third of which are Government-owned while the rest are privately owned. The Kenneth Kaunda International Airport in Lusaka and Harry Mwaanga Nkumbula International Airports in Livingstone are Zambia’s main airports connecting the country with the region and the rest of the world. Other international airports include Simon Mwansa Kapwepwe in Ndola in the Copperbelt Province and Mfuwe in the Luangwa National Park in Eastern Province.
ENERGY
With its vast water resources and coal reserves, Zambia offers abundant investment opportunities for hydroelectric power generation, supply and distribution. The country has well over 1,750 MW of hydroelectric generating capacity. Proven coal reserves exceed 30 million tonnes and satisfy 9% of energy demand. The sector is regulated by the Energy Regulations Board, a statutory body established by an Act of Parliament. Hydro-electricity is mainly supplied and distributed by the Zambia Electricity Supply Corporation (ZESCO) – a statutory body whose operations were commercialized in 2006. The country's only major energy import is petroleum, which satisfies 12% of total energy demand.
TELECOMMUNICATIONS
Zambia is a member of INTELSAT and accesses an earth satellite station, which provides telex, telephone (direct-dial) and television links with the rest of the world. The country also enjoys state-of the-art electronic mail and Internet facilities. The sector is regulated by the Communications Authority of Zambia, another statutory body established by an Act of Parliament. Over 97 percent of the telephone exchanges are automatic. In the main urban centers public telephones and privately operated cellular telephone networks are in place. The Telecommunication infrastructure is relatively developed and the state-owned Zambia Telecommunications Company (ZAMTEL) is earmarked for commercialization. There are currently 3 companies providing mobile telephone services namely Zain, MTN and Cell-Z (a mobile segment of ZAMTEL).
HEALTH
Government and private hospitals and clinics provide health care. The private hospitals have earned a reputation as providers of good quality health care. Major surgery cases are usually referred to the Republic of South Africa. Flying doctor services cover remote areas and provide immediate care and transport for urgent cases. Investment opportunities for establishing specialized hospitals to treat such referral cases are, therefore, unexploited.
EDUCATION
Revitalization of the educational system is being accorded high priority especially in primary education. The Education Sector Investment Programme (ESIP) stresses the rehabilitation of educational facilities and improvement of the quality of education. There are currently three (3) public universities, some private universities and a good number of technical colleges, thus the massive investment opportunities for provision of university level and other tertiary education.
FINANCIAL SYSTEM AND THE CAPITAL MARKET
The financial system of the country is regulated by the Bank of Zambia, which is the country’s central bank. The main commercial banks are Barclays Bank Limited, Standard Chartered Bank Plc, Stanbic Bank Limited, Zambia National Commercial Bank Plc and Finance Bank Limited. The smaller banks include Indo-Zambia Bank Limited, Citibank Limited, Cavmont Capital Bank Limited, Invest Trust Bank Limited, Bank of China and Access Bank Zambia Limited. In addition to normal commercial banking, the sector is engaged in loan syndications. The capital market has, following the establishment of the Lusaka Stock Exchange (LuSE) and the repeal of the Exchange Control Act in 1994, boosted the financial system. There are currently 16 listed and 11 quoted companies on the LuSE.
ECONOMIC REVIEW
Government has continued to pursue liberalised market-led economic policies aimed at facilitating a private-sector-led economic development of the country. The Ministry of Finance formulates government's economic policy. The IMF prescribed Poverty Reduction and Growth Facility, which commenced in 1999, has continued to be implemented in order to improve the economic environment. Zambia reached the Highly Indebted Poor Country (HIPC) completion point in April 2005. Having attained the final stage of the HIPC process, the country has received substantial debt relief which has seen a reduction in Zambia's external debt stock. The total external debt stock, which was estimated at US$7.2 billion, reduced to US$1,093 million by end of 2008. Gross Domestic Product The economy registered a real gross domestic product (GDP) growth rate of 5.8 percent in 2008, down from 6.2 percent in 2007. Major primary contributors to GDP in 2008 were: agriculture (12.2%), construction (11.0%), manufacturing (10.1%) and mining (8.4%). Growth sectors presently being promoted by the Government comprise agriculture, manufacturing, mining, health, education, ICT and tourism sectors. Growth sectors have experienced exponential growth in recent years, and are expected to continue this trend in future due to the numerous investment opportunities currently available in Zambia.
FISCAL OUT TURN
Government's fiscal policy is focused on achieving a domestic budget surplus, through the continued adherence to a cash budget, improved revenue collection and strict control of expenditures. Other fiscal policy objectives are focussed at reducing public debt so as to increase liquidity available to the private sector for investment and increasing social sector expenditures in order to alleviate poverty.
ECONOMIC OUTLOOK
The prospects for continued economic growth look bright, given the enhanced investment in the mining sector and the anticipated increase in non-traditional exports, following government's ratification of the SADC Trade Protocol.
