investing in zambiA 2011 The conference is supported by FOREWORD
Foreword H.E. Anderson K. Chibwa High Commissioner of the Republic of Zambia to Malaysia
t gives me great pleasure to present launch the Sixth National Development to you the Zambia Investment Plan, 2011-2015 to develop human IReport for 2011 as an introduction capital and implement solid investment to Zambia and its investment climate. projects, especially in transportation and The Zambia Investment Forum 2011, power that will fundamentally improve Kuala Lumpur is the first effort by the the country’s growth prospects and long Zambia High Commission in Malaysia to term structural issues. This all culminates promote Zambia in South East Asia as an into a favourable investment climate alternative destination and regional hub needed to support growth. for investments within Southern Africa. Lastly, I would like to express my sincere The Forum takes place at a time when gratitude to Developing Markets Associates, Africa’s new trading partners search Africa Matters and all our sponsors who for direct investment opportunities. have helped make the forum possible. This is also a time when there is still some uneasiness after the impacts of the global The government and people of the economic downturn. Fortunately, due to Republic of Zambia are ready to welcome a smooth process of economic reforms, you to today’s event where information Zambia is one of the countries in Africa will be provided on the key areas for that proved to be resilient during the business and investments. recent global financial crisis and offers good prospects for the years ahead.
Plans such as the Private Sector Development Plan, and the Financial Sector Development Plan are now underway to bring the country to middle income status by 2030 with long term growth strategies to fully integrate H.E. Anderson K Chibwa Zambia into the global economy. High Commissioner of the Later this year the government will Republic of Zambia to Malaysia
2011 | INVESTING IN zambiA 1 INTRODUCTION
Introduction Baroness Chalker of Wallasey Chairman, Africa Matters Ltd
t is my pleasure to welcome you to Zambia is blessed with some of the most this Zambia Investment Forum. The spectacular scenery in Africa, including IGovernment of Zambia brings to the Victoria Falls. And with huge tracts of Kuala Lumpar today a strong delegation fertile land which enables extensive and led by Hon Situmbeko Musokotwane, varied crop growth and the extensive Minister of Finance and National farming of livestock, the country is well Planning, illustrating the commitment of placed to be able to take over as the the Zambian government to attracting region’s breadbasket. The increased investment to the country. I know that a concern for food security among many vital link will also be HE Anderson Kaseba countries of the world offers Zambia Chibwa, Zambian High Commissioner a further opportunity to develop this to Malaysia, who initiated today’s strong agriculture base. investment drive. The purpose of this Investment Forum It is testament to the strength of Zambia’s is to update investors and potential economic and political foundations, not investors on Zambia’s progress: to to mention its people that, in a region learn what has been and is being done which has experienced conflict and to improve the investment climate, to upheaval, Zambia has remained at peace, examine the many opportunities which and prospered. Many challenges, of now exist, and to hear from those course, exist but Zambia has weathered who have already taken a stake in the the global economic downturn robustly country’s future. and its own economy continues to grow, by a highly respectable 6.6% in 2010 and By 2030 Zambia intends to attain with a strong forecast for 2011. middle-income status. Today there is an opportunity to engage with this Today we will hear about opportunities extremely senior government delegation in mining, as would be expected in a to learn more of those plans and how country so generously endowed with the private sector can play its part, and such reserves; but how many are aware to understand that Zambia is truly a place that nickel deposits are likely to overtake where businesses can, and will, flourish. copper as Zambia’s main mineral export commodity? Outside of the mining sector, we will be hearing about the major steps that the government is making – and the major investment opportunities – in growing key sectors such as Energy Baroness Chalker of Wallasey and Tourism. Chairman, Africa Matters Ltd
2 INVESTING IN zambiA | 2011 CONTENTS
Contents Economic Overview 4 Political history 12 Agriculture 14 Energy 16 Infrastructure 18 MINING 20 TOURISM 22 Sponsors 25
Publisher: Chris Gerrard Contributors: Jonathan Capal, Cosima Cassel, Manji Cheto, Natalia Debczak-Debski, Justine Doody, Derek Ingram and Moin Siddiqi Art Director: Steven Jones Conference Team: Deanne Lintorn, Jennie Wengrovius Conference Directors: Debbie Goldthorpe, Leon Isaacs, Atam Sandhu Correspondence Developing Markets Associates Ltd (DMA), 150 Tooley Street, London, SE1 2TU email: [email protected] | web: www.developingmarkets.com | www.moneymove.org | www.sendmoneypacific.org DMA acknowledge the assistance of all the individuals and organisations who have contributed to his publication. The views expressed herein are the opinions of the authors, and do not necessarily represent the High Commission of Zambia, the Government of Zambia, DMA or AML. All rights reserved. No part of this publication may be reproduced or transmitted in any form without the written permission of the publisher. Published by Developing Markets Associates Ltd (DMA) Printed by Xpress Print Picture credits: istockphoto.com
© Developing Markets Associates Ltd
2011 | INVESTING IN zambiA 3 Economic Overview
Resource-rich Zambia set for a strong decade By MOIN SIDDIQI, economist
ambia, strategically located Zambia has weathered recent waves and base-metal prices are rising – thanks in Southern Africa, is among of external shocks – soaring prices of to a revival in global industrial production. Z the region’s fastest growing food and fuel, as well as the OECD- Zambia produces about 55% of Africa’s democratic countries, showing great wide recession – exceptionally well, mineral copper output and planned mega resolve both socially and economically. with economic growth only slowing investments will help underpin the sector’s Since 2000 the country has made great from 6.2% in 2007 to a low of 5.7% in continuous growth. The Chamber of strides towards fostering a climate for 2008 before edging upward to 6.3% Mines projects copper output exceeding sustainable, vigorous output growth and 6.6%, respectively, over 2009 and the milestone 1mn tonnes level by 2012, – a prerequisite for much needed job 2010, according to the International compared to 740,000 tonnes in 2010, as creation and poverty alleviation; fiscal Monetary Fund (IMF). The Fund has US$5bn worth of investments in recent probity; expanding the private sector’s commented: “Zambia’s economic years bring dividends. contribution to national income; and prospects continue to improve, thanks realising a longer-term vision of a to sound macroeconomic policies and Nominal gross domestic product (GDP) diversified and ‘self-sufficient’ economy. progress in structural reforms. Growth swelled by a massive seven-fold over Good policy making and political stability remains strong, inflation is subdued, and the period 2000-2010 and is projected have facilitated substantial foreign direct the external position has been solid.” by the IMF to reach 76bn Kwacha (KZ), investment in mining as well as other or US$15.8bn, representing a compound sectors of the economy, such as tourism, External demand for Zambian products is annual growth rate (CAGR) of 59.5%, manufacturing, construction, power, strong, with more than half of its exports driven by higher output in the mining, financial services and non-traditional now going to Asia and the Middle East. construction and agriculture sectors, as agriculture, thus creating many thousands The mining sector (led by copper) well as the pursuits of macro-prudential of jobs during the past decade. accounts for nearly 80% of total exports policies and structural reforms, focusing
4 INVESTING IN zambiA | 2011 Economic Overview on privatisations, trade liberalisation and Britain, the US, Japan, Sweden, Denmark Officials put China’s total investment since improving the business climate. and the European Union (EU). 2007 at US$6.1bn, mainly in the mining industry, creating over 15,000 jobs. Beijing The construction boom, led by A safe investment has pledged US$5bn in loans to private megaprojects in sectors such as energy, destination Zambian mining companies, reinforcing its mining and transport, has benefited centrality to the sector’s future. CNMC cement, steel and timber producers. Zambia is one of the most open countries intends to invest a further US$600mn President Rupiah Banda says: “Zambia to foreign direct investment (FDI), as this year. The government has abolished a is currently undergoing the biggest measured by the World Bank’s Investing 25% mining windfall tax, which has helped surge in development and construction Across Borders 2010 indicators. All its boost miners’ profits. that we have seen in our history. This key sectors – notably mining, telecoms, government’s vision is to complete banking/finance, electricity, real estate The private investment climate has development projects and to ensure that and tourism – are fully open to 100% improved, reflected in Zambia’s the Zambian people become self-reliant.” foreign equity ownership (see Table 4). competitiveness ranking. Zambia was Construction grew at 10% in 2010, Felix Mutati, Minister of Commerce, Trade among the ‘top 10’ global reformers in up from 9.5% the previous year. and Industry, stated: “Zambia’s incentive the World Bank’s Doing Business 2011 package is among the best in the region, report. Its overall rating in the Ease of Interest rates have fallen steadily from if not the whole of Africa.” Doing Business category was 76 (out of the mid-2000s and credit to the private 183 economies), up from 90 in 2009 and sector has risen annually (except in According to the World Investment 116 in 2008. At SADC regional level, it 2009). The Bank of Zambia’s agenda is Report 2010, Zambia received (net) ranks third after South Africa (34) and to preserve financial stability. The mix of FDI inflows of US$4.2bn over 2005- Botswana (52). fiscal discipline, a sound monetary stance 09, compared to US$812mn in 2000- and currency stability also helped bring 04. There is every indication of further Recent investor-friendly measures inflation down to single digits in 2010 for increases, with the head of the Zambia include abolishing the minimum capital the first time in the nation’s history – a Development Agency reporting that FDI requirement, computerised customs huge decrease from an annual inflation pledges worth US$4.3bn were secured in declarations, introducing an electronic rate of around 30% in 2000. The budget the first 11 months of 2010, exceeding case-management system in the courts, deficit (which averaged 6% of GDP in the the agency’s full-year target of US$3bn. creating a one-stop-border post to 1990s) was cut to 2.5% in 2004-2010, Mining and manufacturing are the most facilitate intraregional trade and simplifying while Zambia’s public debt was reported popular sectors, but strategic investors trade regime for small and medium sized at 25% of GDP at end-2009. are also eyeing infrastructure (energy companies aimed at expanding their capacity to exploit new opportunities.
Zambia is currently undergoing the biggest The World Bank believes that Zambia surge in development and construction needs to spend an average of US$1.6bn per year over the next decade to develop that we have seen in our history its infrastructure to the level of peer markets in regions such as South East Asia. ODA flows have now peaked, which Zambia has been one of the main African and transport), tourism and ICT. Zambia in turn, require tapping private capital for beneficiaries of the enhanced Highly needs such diverse investments, especially projects (mainly in power and transport) Indebted Poor Countries (HIPC) and in ‘value-added’ manufacturing. through public-private partnerships or Multilateral Debt Relief Initiative (MDRI). joint ventures with foreign operators. The World Bank, under MDRI and HIPC, The top sources of 2009 investment in Strengthening project appraisal capacity is provided a total of US$2.7bn in debt Zambia were Canada (US$1,371mn); vital to select mega schemes that provide write-offs in April 2005 and January 2006, India (US$1,208mn); Switzerland the highest possible economic return. respectively. This, in turn, facilitated a debt (US$768mn); Australia (US$739mn); The IMF noted: “Infrastructure financing reduction from US$7.46bn in 2004 to and China (US$506mn). Major foreign needs are considerable. The authorities US$1.86bn, thereby creating fiscal space for miners at work in the country include UK- plan to rely increasingly on private social development. Consequently, external based Vedanta Resources, Canada’s First financing of growth-critical infrastructure debt to official creditors fell sharply from Quantum Minerals, South Africa’s African investments.” Most infrastructure is 114% of GDP in 2004 to 12% by 2009. Rainbow Minerals, Canadian-Australian still state-owned – hence the scope Equinox Minerals, Vale Mining of Brazil, for privatisation. The country has also continued to Eurasian Natural Resources of Kazakhstan, receive substantial donor funding through Dutch-based Cunico Resources and China Tremendous untapped project support, mainly for healthcare, Nonferrous Metals Company (CNMC), potential education and other social priorities. among others. Maxwell Mwale, Minister Overall, official development assistance of Mines and Minerals Development, said: Relative to peer low-income economies, (ODA) flows have totalled US$2.5bn “To attract foreign investors, we have put Zambia is richly endowed with a wealth over 2007-2010. Principal donors are systems in place that are in line with the of natural assets; primarily arable land, a the African Development Bank (AfDB), best practices in the world.” favourable climate and ample water,
2011 | INVESTING IN zambiA 5 Economic Overview
forestry and mining resources. These The Minister of Mines and Mineral Bank, Zambia’s commercial agricultural endowments offer opportunities for Development, said: “We have employed expansion will be mainly along the diverse economic activities including German technology in the sedimentary extensive margins as their yields are mining, agriculture, forestry, fisheries, eco- basins of this country and the results already comparable to those in developed tourism and hydroelectricity, as well as have indicated very positive possibilities countries. The 2010 maize crop hit a manufacturing and agro-processing facilities. for discovering oil or gas.” Mining/ record high of 2.8mn tonnes, more than quarrying, the bedrock of forex earnings, double the average for the past decade. Still, large chunks of mineral and agricultural should become more diversified with assets remain ‘untapped’ and huge the opening of new mines for coal, gold, Zambia boasts unrealised potential for hydropower resources are also unused. The nickel, manganese, and uranium in the hydropower generation (estimated at World Bank’s President, Robert Zoellick coming years. According to London- 6,000 MW) – enough electricity both for said: “Zambia has great potential to increase based BMI consultancy, Zambia’s mining domestic and regional markets. Ernest productivity in the agriculture sector, where industry could grow at 6.4% per year Mupwaya, Managing Director of state- poverty is concentrated and become between 2010 and 2014, led by higher owned ZESCO, explained: “The whole more regionally competitive by reducing copper and cobalt production. sub-region has power deficits, except the costs of exporting local produce and for Congo (DR) and because of that expanding access to energy. Broader-based, Another asset that remains largely there is a huge potential for trade. The more inclusive economic growth is key for untapped is agriculture since more than Southern African Power Pool facilitates Zambia to achieve its goal of becoming a half of Zambia’s 752,600 sq. km surface trade between SADC countries that are prosperous middle-income economy”. area is arable land. Presently, just 10% linked. Zambia has to increase investment of total land and 40% of arable land is in power generation so that we can tap The Bank’s support to Zambia has totalled cultivated. Therefore, vast fertile land and into this market.” US$4.6bn for a total of 250 projects. water supply (Zambia has two-fifths of the fresh water resources of the southern Substantial water resources in the Zambia, the world’s seventh-largest African region) offer scope for increased Congo and Zambezi river basins are copper producer, holds a variety of farm output via greater diversification accessible for large-scale irrigation and other industrial minerals such as nickel, into higher-value crops, commercialisation the development of hydropower. The zinc, lead, precious metals, gemstones, among smallholders and better linkages nation’s electricity generation capacity emeralds, cobalt and manganese. There between farms and agro-processors, was estimated at 2,200MW in December are also potential energy resources, as well as increased investment in rural 2010. Electricity tariffs (estimated at including uranium, coal and hydrocarbons. electrification. According to the World US$0.037 cents) are amongst the lowest
6 INVESTING IN zambiA | 2011 Economic Overview in southern Africa despite a 27% hike in developing Asian economies requires the regional average), fuelled by mining 2008. The plan is to raise tariffs to cost- ‘productivity-enhancing investments’ in activity, large capital spending and recovery levels (US$0.08 cents) by 2013. both public infrastructure and services expanded power generation capacity. The (road, rail, power generation and ITC) national output is predicted at US$26.72bn Zambia is home to tourist ‘paradise’ spots, and business facilitation (efficient financial by 2015, up from US$18.58bn in 2011. such as the Victoria Falls (the world’s markets, skilled labour, health and an Financial stability, reflected in single-digit largest waterfall), Lake Tanganyika (the improving investment climate). inflation and manageable budget deficits, world’s second-largest freshwater lake) should continue. and giant national parks, along with many The World Bank noted: “These goals other attractions. However, tourist flows are attainable, given Zambia’s great The risk of ‘debt distress’ is judged fall below true potential, given natural wealth of natural resources, its improving negligible, though Zambia will need to endowments. The World Bank points out external position and its recent record tap the global capital markets to finance that the chief reasons are a relatively poor of economic success. But success must growth-critical infrastructure projects road infrastructure and higher business be based on sound policies that maintain because official aid (as a share of GDP) is costs as an indirect measure of the level macroeconomic stability, promote expected to decline in the coming years. of “tourism establishment” serving and equitable development throughout the There is then an urgent need for increased accommodating tourists. Estimates suggest country, build the business environment FDI into key sectors – especially labour- that if the transport network and the necessary to make Zambian products intensive agribusiness, construction business climate were as well developed more competitive, and address the and tourism. The mining industry by as South Africa’s, Zambia’s tourist inflows physical and human resource constraints contrast is heavily capital-intensive. would increase by a whopping 51% that now limit opportunities for the two- The IMF envisages FDI in the longer-term compared to existing levels. thirds of Zambians who live in poverty.” stabilising at 5% of GDP. Zambians aspire to live in a strong and The Bank of Zambia’s priorities, as outlined in phase II of the Financial dynamic middle income industrial nation that Sector Development Plan (FSDP), are to improve access to financial services provides opportunities for improving the and upgrade market infrastructure and wellbeing of all… provide a financial safety net (through the development of a Deposit Protection Scheme). This should help promote micro, The national agenda As a landlocked country, Zambia’s small and medium-sized enterprises optimal development depends also (MSMEs) – the engine of job creation and The Vision 2030 paper A Prosperous on strengthening regional integration, poverty reduction – across both urban Middle-Income Nation by 2030, Republic through its membership of the Common and rural areas. Presently, only a third of of Zambia, states: “Zambians aspire to Market for Eastern and Southern the eligible banking population has access live in a strong and dynamic middle- Africa (COMESA) and Southern Africa to financial services. income industrial nation that provides Development Community (SADC). opportunities for improving the well- A number of donor-funded capital Looking ahead, the Zambian authorities being of all, embodying values of socio- projects are underway, of which the face stiff but achievable future economic justice, underpinned by the most important is the construction challenges. These include sustaining principles of (i) gender responsive of a North-South transit corridor. high ‘inclusive’ economic growth, whilst sustainable development; (ii) democracy; The mega project – linking southern ensuring fiscal sustainability; tackling (iii) respect for human rights; (iv) good African ports via the Zambian copper- infrastructural bottlenecks, mainly in traditional and family values; (v) positive belt and Congo (DR) to Dar es Salaam power and transportation, which hinder attitude towards work; (vi) peaceful (Tanzania) – is being overseen by a Joint private investment and trade; reducing coexistence; and (vii) private-public task force representing the East African exposure to the boom-and-bust cycles partnerships.” The country is laying the Community (EAC), COMESA and SADC. of copper prices through accelerating foundations for future development. It aims at eliminating barriers the diversification programme; and to intra-regional trade flows by improving public sector efficiency The overarching goals are to increase reviewing regulatory, administrative and accountability; as well as achieving wealth and job creation through and infrastructure bottlenecks to the Millennium Development Goals citizenry participation and technological transportation within the sub-regions. (MDGs). advancement, fostering a diversified, export-oriented economy and building The future Given further structural reforms, there is stronger institutions that can deliver no reason why this ‘resource-rich’ nation better public services. Achieving the The medium-term prospects are cannot become Africa’s equivalent of national agenda is, however, contingent encouraging as a decade of good Malaysia in the coming decades. If past on raising annual GDP growth to governance supported by higher inward performance is anything to go by, Zambia 8% or higher, above the 6% attained investments and donor funding comes to possesses both the capacity and resolve between 2005-2010. And, enhancing fruition. The IMF forecasts annual GDP to achieve its developmental goals. competitiveness to the level of growth at 7% over 2011-15 (exceeding The nation’s future is bright.
2011 | INVESTING IN zambiA 7 Economic Overview
T Kable 1: ey economic and financial indicators
Estimate Projections 2000 2005 2007 2009 2010 2011 2012 2013 Nominal Gross Domestic Product (GDP) at market prices (billions Kwacha) 10,075 32,014 46,195 64,616 76,015 87,014 98,012 109,488 Nominal GDP growth(1) 34.7 23.5 20.2 17.3 17.6 14.4 12.6 11.7 Real GDP growth(1) 3.6 5.3 6.2 6.3 6.6 6.4 6.7 6.8 Consumer price inflation (%) year-end 30.1 18.3 10.7 13.4 8.2 7.5 6.5 5.5 Real per capita GDP growth(1) 0.3 3.4 4.2 4.3 4.6 4.4 - - Gross capital formation (%) of GDP 17.4 23.7 25.4 23.5 23.8 24.1 24.2 22.2 of which: Private investment 9.6 16.2 20.1 17.8 18.3 16.5 15.5 13.6 Gross national savings (%) of GDP - 15.2 15.4 20.3 21.4 20.3 19.2 17.0
Budget balance (%) of GDP, incl. grants -4.4 -2.8 -1.3 -3.2 -2.7 -3.2 -4.0 -3.2 Total Government debt (%) of GDP 39.4 87.9 25.8 26.0 25.7 26.7 28.3 29.1 Money and quasi-money (M3)(1) 75.1 3.3 25.3 7.7 16.0 18.0 - - Discount rate (%)(3) (end-period) 25.6 14.8 11.7 8.4 6.9(2) (4)
Kwacha: US$1 (period average) 3,111 4,463 4,002 5,046 4,791 4,850 (1)Annual percent change. (2)September. (3)The Bank of Zambia’s benchmark rate. (4)The BoZ could maintain a broadly neutral monetary policy this year.
Demographics: Area (sq km): 752,614. Population (2009): 12.94mn. GDP (2010): US$15,803mn; GDP per capita: US$1,221.
Source: Ministry of Finance & National Planning, IMF estimates and projections.
Table 2: Balance of payments and external debt (in US$mn, unless otherwise indicated)
Estimate Projections 2005 2007 2009 2010 2011 2012 2013 Exports (f.o.b) 2,247 4,510 4,319 6,850 6,679 6,335 6,580 Copper (% of exports) 66.5 75.5 73.6 79.6 78.3 76.0 71.6 Imports (f.o.b) 2,161 3,611 3,413 4,733 5,527 5,903 6,344 Petroleum (% of imports) 14.4 13.6 15.7 13.3 12.6 13.1 13.4 Trade balance 86.0 899.0 906.0 2,117 1,152 432.0 236.0 Terms-of-trade (%)(1) 9.4 5.5 -10.1 22.4 -2.6 -7.4 -8.1
Current account balance -727.8 -967.4 -703.1 -258.0 -659.0 -1,270 -1,392 As (%) of GDP -10.1 -8.3 -5.5 -1.6 -3.5 -6.2 -6.3 Foreign aid flows (ODA)(2) 1,075 756.0 500.0 500.0 400.0 600.0 500.0 Gross international reserves 560.0 1,090 1,882 2,140 2,158 2,348 2,605 Import-coverage(3) 2.1 2.4 4.1 3.7 3.9 3.7 3.6
Total gross financing need -2,683 -500.0 -200.0 -700.0 -200.0 200.0 200.0 FDI inflows(4) 357 1,324 959.0 988.0 1,106 1,230 1,351
Public external debt(5) 5,377 2,758 3,049 4,061 4,961 Total debt stock (%) of GDP 75.0 23.9 24.0 26.0 26.7 Debt (%) of merchandise exports 213.4 57.6 66.8 56.8 70.6 Debt service ratio (%)(6) 11.1 2.5 3.8 1.0 1.5 (1)Annual (%) change in terms-of-trade (the ratio of export to import prices). (2)Official development assistance.(3) Gross forex reserves in months of imports of goods and services. (4)Net flows of foreign direct investment, after repatriation of interest and profits. FDI 2009 inward stock: US$9,504mn, up from US$3,966mn in 2000. (5)Zambia reached the completion point under the Enhanced HIPC Initiative in April 2005. MDRI relief was delivered in January 2006. (6)Scheduled interest & amortisation payments as a percent of total exports.
Sources: Zambian authorities, IMF, World Bank and UNCTAD database.
8 INVESTING IN zambiA | 2011 Economic Overview
T FDIable 3: inflows to Zambia (US$mn)
Estimate Projections (%) chg 2000 2005 2007 2009 2010 2011 2012 2013 2000 2003 2005 2007 2009 2000-09 Nominal Gross Domestic Product (GDP) Inward FDI (net)(1) 122 172 357 1,324 959 686.1 at market prices (billions Kwacha) 10,075 32,014 46,195 64,616 76,015 87,014 98,012 109,488 Total FDI stock(2) 3,966 2,341 3,183 5,375 9,504 139.6 Nominal GDP growth(1) 34.7 23.5 20.2 17.3 17.6 14.4 12.6 11.7 As (%) of GDP 122.4 54.0 44.3 46.5 74.5 Real GDP growth(1) 3.6 5.3 6.2 6.3 6.6 6.4 6.7 6.8 Consumer price inflation (%) year-end 30.1 18.3 10.7 13.4 8.2 7.5 6.5 5.5 Sources: UNCTAD World Investment Reports. (1) Real per capita GDP growth 0.3 3.4 4.2 4.3 4.6 4.4 - - (1)After repatriation of interest, profits and dividends (IPDs). Gross capital formation (%) of GDP 17.4 23.7 25.4 23.5 23.8 24.1 24.2 22.2 (2)FDI stock represents the value of the share of affiliate enterprise at book value or historical cost, reflecting prices at the time when the investment of which: Private investment 9.6 16.2 20.1 17.8 18.3 16.5 15.5 13.6 was made and reserves (including retained profits) attributable to the parent firm, plus net indebtedness of the affilitate to the parent company. Gross national savings (%) of GDP - 15.2 15.4 20.3 21.4 20.3 19.2 17.0
Budget balance (%) of GDP, incl. grants -4.4 -2.8 -1.3 -3.2 -2.7 -3.2 -4.0 -3.2 Total Government debt (%) of GDP 39.4 87.9 25.8 26.0 25.7 26.7 28.3 29.1 Table 4: Investing Across Sectors Money and quasi-money (M3)(1) 75.1 3.3 25.3 7.7 16.0 18.0 - - Foreign equity ownership index (100= full foreign ownership allowed) Discount rate (%)(3) (end-period) 25.6 14.8 11.7 8.4 6.9(2) (4) Country Regional Global Kwacha: US$1 (period average) 3,111 4,463 4,002 5,046 4,791 4,850 Score average average Mining, Oil & Gas 100 95.2 92.0 Agriculture & forestry 100 97.6 95.9 Light manufacturing 100 98.6 96.6 Telecommunications 100 84.1 88.0 Electricity 100 90.5 87.6 Banking 100 84.7 91.0 Insurance 100 87.3 91.2 Transport 100 86.6 78.5 Media 100 69.9 68.0 Healthcare, waste management 100 100.0 96.0 Construction, tourism 100 97.6 98.1 Sources: Investing Across Borders 2010, World Bank.
T Fable 5: inancial soundness indicators for ZAMBIA’s banking sector (in percent, unless otherwise indicated) August 2006 2007 2008 2009 2010 Commercial banks Regulatory Tier 1 capital to risk-weighted assets 18.0 15.9 15.7 18.9 20.3 Capital to total assets 9.1 9.2 9.9 11.2 11.0 NPLs(1) to total gross advances 11.3 8.8 7.2 12.6 14.9 Loan loss provisions to bad debts 88.3 73.2 104.6 86.6 80.5 Return on assets (ROA) 5.1 4.7 3.6 2.1 2.8 Return on equity (ROE) 30.6 35.1 20.8 9.4 14.0 Liquid assets to total assets 41.3 37.6 35.5 38.8 43.4 Foreign currency loans to total gross loans 34.0 32.5 42.1 36.4 35.1 Sectoral distribution of loans Households 16.1 15.5 30.1 30.9 32.1 Government and parastatals 6.2 9.1 1.9 3.1 1.8 Agriculture 23.9 18.4 16.0 19.0 17.0 Mining 4.4 4.1 5.0 4.0 3.0 Manufacturing 14.0 11.0 11.0 12.0 14.0 Construction 2.4 3.7 4.0 3.0 4.0 Services 9.8 13.3 9.0 8.0 6.0 (1)Non-performing loans are bad debts – (typically in interest arrears for 90 days or more). Banks are required to cover these credit losses commonly referred to as “Expected losses” on an ongoing basis by provisions & write-offs. Source: The Bank of Zambia.
2011 | INVESTING IN zambiA 9 Economic Overview
T Zable 6: ambia’s Business Data
Zambia Sub-Saharan OECD Africa Average Starting a business Procedures (number) 6.0 8.9 5.6 Duration (days) 18.0 45.2 13.8 Cost (% of GNI per capita) 27.9 95.4 5.3 Paid in min. capital (% of per capita) 0.0 145.7 15.3
Dealing with construction permits Procedures (number) 17.0 17.6 15.8 Duration (days) 254.0 239.5 166.3 Cost (% of income per capita) 2,454.2 1,773.3 62.1
Registering property Procedures (number) 5.0 6.5 4.8 Duration (days) 40.0 67.9 32.7 Cost (% of property value) 6.6 9.6 4.4
Paying taxes Payments (number per year) 37.0 37.3 14.2 Time (hours per year) 132.0 315.1 199.3 Profit tax (%) 1.7 23.1 16.8 Labour tax and contributions (%) 10.4 13.5 23.3 Other taxes (%) 4.0 31.5 3.0 Total tax rate (% profit) 16.1 68.0 43.0
Trading across borders Documents for exports (number) 6.0 7.7 4.4 Time for exports (days) 44.0 32.3 10.9 Cost to export (US$ per container) 2,664.0 1,961.5 1,058.7 Documents for import (number) 8.0 8.7 4.9 Time for import (days) 56.0 38.2 11.4 Cost to import (US$ per container) 3,315.0 2,491.8 1,106.3
Enforcing contracts Procedures (number) 35.0 39.1 31.2 Duration (days) 471.0 639.0 517.5 Cost to enforce; in (%) of claim 38.7 50.0 19.2
Protecting investors Extent of disclosure index(1) 3.0 4.8 6.0 Extent of director liability index(1) 6.0 3.4 5.2 Ease of shareholder suits index(1) 7.0 5.0 6.8 Strength of investor protection index(1) 5.3 4.4 6.0
Getting credit Strength of legal rights index(1) 9.0 4.6 6.9 Depth of credit information index(2) 5.0 1.7 4.7 Public registry coverage (% adults) 0.0 2.7 8.0 Private bureau coverage (% adults) 3.0 4.9 61.0
Closing a business Time (years) 2.7 3.4 1.7 Cost (%) of estate 9.0 20.7 9.1 Recovery rate, cents on dollar 27.2 23.2 69.1
(1)(0-10) – Most 10; Least 0-1. (2)(0-6) – Scope and accessibility of credit information distributed by public credit registries and private credit bureaus; Most 6; Least 0-1.
Source: World Bank Doing Business 2011 report.
10 INVESTING IN zambiA | 2011 Economic Overview
CHART 1: Trends In Real Growth Rates (%) Zambia versus Peer SADC Countries 7 6.5 6.3 6.5 6.4 5.8 6
5 4.5 3.9 4
3
2
1 -0.4 0 Zambia SADC Zambia Zambia SADC Zambia SADC -1 SADC 2004-08 2009 2010 2011
Source: IMF, African Department database 2010. The Southern Africa Development Community (SADC) represents Angola, Botswana, DRC, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe.
CHART 2 GDP by Sector, 2009 CHART 3 Components of GDP by (percent) Expenditure (percent of total)
1% 3% 2% Agriculture, Forestry Private 4% 21% and Fishing 20% consumption 6% Construction Private 35% investment Wholesale and 9% Retail trade Government consumption Community services Exports Manufacturing 9% 19% 21% Imports Financial services and Retail Estate 10% Business activities 11%
16% Transport and 13% Communications
Source: Central Statistical Office data. Gas, Electricity Source: Business Monitor International. and Water Hotels Mining and Quarrying
CHART 4 Main Destination of Exports CHART 5 Main Sources of Imports (percent of total 2009) (percent of total 2009)
China South Africa 20% Saudi Arabia UAE 28% 34% Congo (DRC) China South Korea Congo (DRC) 3% South Africa Zimbabwe 4% 52% Egypt India 4% 5% India Kenya 4% 5% Others* Belgium, Others* Japan, 8% Namibia, Zimbabwe, 6% UK, USA, 6% Italy, UAE Germany, 8% 7% 7% Netherlands
Source: IMF, Direction of Trade Statistics. Source: IMF, Direction of Trade Statistics.
2011 | INVESTING IN zambiA 11 POLITCAL HISTORY
Zambia made ambitious development plans that included economic diversification, creation of 100,000 jobs, better schooling and communications.
In the late 1960s Zambia was the third largest copper mining country after the US and the Soviet Union. Then in 1975 world prices collapsed and Zambia’s plans were dealt a serious blow. Demand fell and copper prices went on tumbling. Complacency in government about the strong economy led to a failure to get moving to diversify and particularly to develop agriculture. The Zambian economy went into freefall.
From the outset of independence other factors had put Zambia into great difficulty.
The country had been born into a region in political turmoil. Less than a year after independence Ian Smith, the leader of neighbouring Southern Rhodesia, had made his Unilateral Declaration of Independence (UDI) and Zambia and other independent African Commonwealth countries had demanded that Britain should send in troops to overthrow him and instal an African government under the nationalist leader Joshua Nkomo.
President Kenneth Kaunda offered his country as a base for any attack, but the British just sent a few aircraft there simply to pre-empt him asking anyone else to send planes. The Labour government in Westminster under Prime Zambia Minister Harold Wilson, which had a tiny Parliamentary majority, refused to take A troubled birth, any direct military action. Closure of the border with Rhodesia under the sanctions programme a modern success story hit Zambian exports. Civil war in neighbouring Angola closed the Benguela By Derek Ingram, OBE railway and saw an influx of refugees from the war-zone as well as from South West hen decolonisation, or what had dragged. Dramatically, a deal was Africa (modern day Namibia). British prime minister Harold concluded only two or three hours W Macmillan had called “the wind before independence came at midnight On top of all this, Zambia’s giant of change blowing through this continent,” on 24 October. neighbour to the north, the Congo, was brought independence to Northern also in political turmoil – not least its Rhodesia in 1964 the country was in a I was there in the stadium in Lusaka that immediately adjacent copper-producing more fortunate economic position than night. I went downstairs, into the passage province, Katanga, which threatened to many others in Africa. Copper prices behind my seat before the Union Jack form a breakaway state. were extremely high and the mines were came down and the celebrations began, producing a healthy national income. and a friend slipped into my hands a Zambia was a landlocked country in a sea statement announcing the agreement. of trouble. In the months before Britain handed over power, tough negotiations between For several years after independence President Kaunda, fervently committed government and the mining companies copper prices remained high and the new to the overthrow of the illegal regime
12 INVESTING IN zambiA | 2011 POLITCAL HISTORY
Meeting (CHOGM) at which the new In 1997 a group of soldiers attempted British prime minister, Margaret Thatcher a coup. Forty-four were sentenced to was forced to agree to a conference in death, but later this was commuted. Lancaster House, London, which lasted three months and brought Ian Smith, Levy Mwanawasa was chosen as the Robert Mugabe, Joshua Nkomo and MMD’s candidate for the 2001 election. other leaders together to end the civil He won with only 29% of the votes yet war in Rhodesia. The talks led to the turned out to be an unexpectedly skilful independence of Zimbabwe in 1980. and able president. That same year the government staved off a coup attempt by local business He brought into the government leaders and the Governor of the Bank individual opposition MPs and in the of Zambia. 2006 elections secured 43% of the vote. He boosted the country’s growth above For Zambia the Zimbabwe settlement 5% and an anti-graft campaign attracted meant some political and economic relief, foreign investments. but at the same time it intensified the even greater political struggle to bring Through these politically turbulent years about the downfall of the apartheid and despite sporadic unrest the fabric of regime in South Africa. Zambia had survived remarkably well.
In 1989 rioting broke out on the In the early stages of the new century the copperbelt and a year later maize price country was making economic progress. rises brought riots to Lusaka. In 1991 In 2005 the World Bank approved a Zambia reverted to multi-partyism and US$3.8bn debt relief package, writing off in the election that followed Kaunda’s more than half Zambia’s external debt. United National Independence Party A serious blow to the country came in August 2008 when President Mwanawasa Zambia is on the road to being one of the was struck by a stroke. He died in Paris three months later. His deputy, Rupiah leading economic lights in the continent Banda, stepped in as acting head of state and elections were called for October. in Rhodesia and the end of apartheid in (UNIP) was defeated at the hands of President Banda won a narrow victory South Africa, kept Zambia stable as he his long-time bitter enemy, mineworkers with 40% of the vote against Michael Sata, famously cried through the years “One leader Frederick Chiluba. leader of the new Patriotic Front (PF), Zambia, One Nation!” who polled 38%. Sata had set up the PF President Kaunda set an example to after leaving the MMD. It was a remarkable performance, but in Africa by stepping down without dispute. 1973 he reluctantly followed the pattern He had been in power for 27 years. Zambia seems set on a sound economic of other newly independent African path. The copper industry was privatised countries and turned the country into a Chiluba’s Movement for Multiparty in the 1990s and investment in the one-party state, whilst managing to keep Democracy (MMD) won a substantial mining sector grew as the burgeoning Zambia peaceful in doing so. majority but he became an increasingly global electronics business created huge controversial figure. One of his first new demand. He also did almost everything possible acts was to try to take away Kaunda’s to reduce Zambia’s dependence on Zambian nationality, the former president The country’s economic growth has the white South, accepting together having been born near the Nyasaland been steady throughout the last decade, with Tanzania Chinese money and (now Malawi) border to Nyasa parents. proving robust to the global recession and construction teams to build the measured at a highly respectable 6.6% TANZAM railway linking Dar es Salaam Zambia passed through many politically in 2010. The World Bank survey Doing with Kapiri Mposhi in central Zambia. difficult years under the Chiluba Business 2011 – Making a Difference for With World Bank help a new hydro- presidency. Changes were made to the Entrepreneurs, ranks Zambia at 76 out of eoectric scheme was developed on the constitution restricting presidents to 183 economies globally, up eight places Kafue River as well as a second power two terms, but in 1996 most opposition on its 2010 ranking. The conclusion station on the north of the Kariba dam. parties boycotted the elections was reached on the basis that its An oil pipeline was completed, running because Chiluba wanted to change the regulations make doing business easy, from Dar to Ndola. constitution to serve a third term. He illustrating the strong foundations that was forced to abandon the idea, not will set Zambia on the road to being In 1979 President Kaunda hosted the having the required two-thirds majority one of the leading economic lights in Commonwealth Heads of Government in parliament. the continent.
2011 | INVESTING IN zambiA 13 Agriculture
commercial production, the former, which accounts for a majority of the rural population and agricultural land use, is still largely dependent on relatively low productivity and low-value production systems.
Although the 1990s saw the beginning of various contract farming schemes providing smallholders access to the necessary technical advice and inputs to produce an agreed product, as well as a market outlet, the practice has been limited largely to areas with relatively better infrastructure and access to input and output markets. The key constraints to the commercialisation of smallholders are:
Limited scope of infrastructure outside urban areas; Limited access to markets and market intelligence; Agriculture Inadequate farmer advisory channels; Limited access to credit needed to A fertile ground capitalise farm operations and to use modern inputs and technologies; Limited use of irrigation; for investment Seasonal constraints to commercial production, particularly in the drier By Manji Cheto southern provinces.
n regional terms, Zambia has a more rapidly, and employs about 80% In order to address these challenges, natural comparative advantage of the country’s population. Primary significant public and private investments I in agriculture. It is endowed with agricultural products such as maize, are required. vast expanses of rich undeveloped wheat, sorghum, cassava, rice, millet, land. Out of a total of 7.5mn hectares groundnuts, soybeans, mixed beans, Government Policies of land, 4.2mn hectares (approximately peanuts, sunflower seed, vegetables, 58%) are classified as medium to high coffee, flowers, tobacco, cotton and The Zambian government recognises potential for agricultural production. sugarcane account for Zambia’s largest agriculture as an engine for economic However, only an estimated 14%-15% is agricultural crop exports. Floriculture growth and poverty reduction. currently cultivated. Zambia also boasts and horticulture are also growing Consequently, there is a deliberate policy free-flowing and easily accessible water, sub-sectors. Cattle, goats, pigs, sheep thrust designed to enhance the productivity owing to its possession of about 40% and poultry constitute the main of the agricultural sector. The Transitional of southern Africa’s water resources. livestock exports. National Development Plan (TNDP) Ground water resources are abundant and Poverty Reduction Strategy Paper in the Congo/Zaire and Zambezi river The key challenge for the sector (PRSP, 2002) call for the development of basins. The combined irrigation potential is to enhance its contribution to a sustainable and competitive agricultural for these areas in Zambia is 523,000 export diversification and broad- sector that ensures food security and hectares, of which only 46,400 hectares based economic growth. The Zambian maximizes the sector’s contributions to (9%) is being used, mostly by commercial economy has historically been heavily GDP and increases agricultural exports to farmers cultivating sugar, wheat dependent on copper mining, but help the national balance of payments. The and plantation crops. These factors, following an earlier decline in copper Agricultural Commercialization Program in addition to ideal climatic conditions production, agriculture emerged as one (ACP, 2001) and the National Agricultural suited to a wide variety of exportable of the alternatives for aiding economic and Cooperative Policy (2004) call for crops, present an opportunity growth and poverty reduction. the development of an efficient, for profitable investment in the However, the contribution of the competitive and sustainable agricultural agricultural sector. sector has been limited mainly because sector. They see development of of its dual nature: a subsistence farming infrastructure in high potential agricultural Zambia’s agricultural sector accounts for subsector coexists with emerging and areas and strengthening cooperatives approximately 13.3% of the country’s large-scale commercial farming. While and farmer organisations as a vehicle for GDP, with the potential to grow even the latter is already geared towards achieving this goal.
14 INVESTING IN zambiA | 2011 Agriculture
Livestock Production CASE STUDY The livestock sub-sector currently Nansanga Farm Block About four commercial farms are in contributes 35% of total agricultural the vicinity of the project area with a production in Zambia. If quality and Nansanga is located in Serenje District. land area of between 500-1000 hectares disease control were improved, the It is a degraded central African plateau, each and employ about 70 workers on industry could raise productivity, dominated by miombo woodlands. It average. Mutende Mumpanga Farm at food security and income. Currently, receives between 700-1000mm average Nkulumashiba grows irrigated coffee, the marketing of livestock is dominated annual rainfalls. owns fish ponds and runs a cattle ranch. by Zambeef. Other farms grow tobacco, soybeans, Rain fed agriculture is the major economic commercial groundnuts and practice activity in Serenje District. A number of agro-forestry. Zambia’s prime livestock growing areas known commercial producers grow maize, are in the Western Province where tobacco, cassava, and groundnuts and are Nansanga has good access roads which are the country has 10mn hectares of land mostly to be found along the TAZARA rail currently being rehabilitated and new ones available for grazing. These are disease- line. The majority of the people settled in are being opened. Power line connections free regions suitable for ranching premium the Nansanga Farm Block area are small- are under way. It has a medium potential cattle and raising livestock. Zambia also scale producers growing mainly maize, for irrigation, since it is covered by a good has a fledging export industry in day- finger millet, sorghum, cassava, groundnuts stream network. old chicks and other poultry products as and beans. Some small-scale farmers also well as suitable land for raising sheep and own livestock (cattle and goats) and rear The creation of the farm block will chickens at very low non-commercial generate employment and businesses for goats for export. scales. There are approximately 330 settler small-scale farmers. This will broaden the small-scale farmer households who will tax base and contribute to government Fisheries be integrated in the production model of revenue. The expected increase in the Nasanga Farm Block. These farmers population will require the provision of Fresh water fish production in Zambia is will be resettled and allocated between social amenities such as schools, shops, concentrated in the northern, western 30-50hectars of land each and facilitated post offices, rural health centres, and roads. and southern regions of the country and to adopt improved agricultural practices/ The communities located in the area will along major rivers and lakes. Commercial technologies and be contracted by the benefit once these are provided. fish production is approximately 70,000 core venture to grow preferred crops. tonnes per year, but still has the potential to increase.
Incentives such as an appropriate Consequently, droughts can lead to less In order to improve fish production, exchange rate regime, financing facilities, profitability, inadequate or late access to government efforts need to be duty exemptions and lower duty rates to inputs and credits for farmers and low supplemented by the private sector, stimulate production for export markets prices and unstable markets for maize. which has already invested in fish have been put in place. marketing and distribution, fish farming However, having acknowledged the and the manufacturing of nets and boats. The government has also embarked importance of crop diversification to the The government is restocking lakes and on a programme to open up potential continued growth of the agricultural sector, rivers and working closely with the donor agricultural land for large-scale the Zambian government has devised community in implementing programmes commercial agriculture development. strategic policies aimed at encouraging aimed at developing suitable management This programme is aimed at creating a farmers to diversify their crops. strategies for the fishing sector. conducive environment that enables both local and foreign investment to Crops like cassava, sorghum and millet Forestry fully exploit the agricultural potential in have promising prospects. Other under developed areas. Currently three agricultural exports such as cotton, Forestry products consist mainly of out of nine farm blocks, namely; Luena, tobacco, spices, horticultural products soft and hard wood timber harvested Nansanga and Kalumwange have been and honey have also shown the from natural forests and commercial opened up. strongest growth among non-mineral plantations covering some 66% of the exports in recent years. Furthermore, country, with other products being honey Arable Farming and crops such as millet, sorghum, soya and beeswax. The privatised Zambia Crop Diversification beans, sunflowers, and cassava are Forest and Forestry Industries Limited more drought-resistant than maize. (ZAFFICO) has opened up the market Zambia’s agriculture sector has continued for softwood while the privatisation to record substantial growth, evidenced The crop diversification efforts are of Zambezi Saw Mills has increased by successive bumper harvests in recent proving successful as a good number of the participation of the private sector times. This growth is largely due to maize farmers who previously concentrated on in the hardwood sector. The Forest cultivation, which is largely concentrated maize cultivation alone have responded Action Plan and various agro-forestry in the south-eastern half of the country. to this trend and are currently engaged in projects aim to improve soil fertility However, maize cultivation is heavily the cultivation of various crops that have through diversification, soil care and reliant on adequate annual rainfall. proved to be profitable and cost-effective. moisture conservation.
2011 | INVESTING IN zambiA 15 Energy
Energy Tapping into Zambia’s potential By Justine Doody
ambia’s energy sector is accounts for about 9% of the country’s 50mn litres. At present a number of burgeoning. In addition total energy needs, and is used mainly in private companies are vying for a share of Z to substantial reserves of the transport and mining industries. It is Indeni, among which are Sasol, the world’s hydrocarbons, much of which are supplied via the TAZAMA pipeline, which largest fuel from coal producer, and India’s still to be discovered, and abundant stretches 1,706km from Dar es Salaam in Essar Group. hydroelectric power plants, it is expanding Tanzania to Ndola in Zambia, and is two- use of solar and biofuels at an incredible thirds owned by Zambia’s government The Indeni Petroleum Refinery is the rate. The government has proposed and one-third owned by Tanzania. It has only refinery in Zambia, commissioned ambitious targets to aid further growth the capacity to ferry up to 600,000 tonnes in 1973 with a design capacity of 1.1mn and development, issuing licences for a year of crude oil from Dar es Salaam to tonnes a year. Until October 2009, hydrocarbon exploration, upgrading its the Indeni Petroleum Refinery at Ndola the refinery was 50% owned by the current hydroelectric power plants, and in Zambia’s Copperbelt. The pipeline is Zambian government and 50% owned declaring the biofuels sector a priority currently operating below its full capacity, by French oil giant Total. In October 2009, industry. Zambia’s rapid economic growth and supply can be erratic. The Zambian the Zambian government agreed to has strained its power infrastructure, and government launched a five year plan in purchase Total’s stake in the refinery, and in June 2009, the government signalled its 2009 to provide for maintenance and is considering seeking a strategic partner intent to raise US$800mn to invest in this. upgrading of the pipeline infrastructure, to help manage the plant, a decision will and as such, provides a significant be made in March 2011. Hydrocarbons – opportunity for private investors. imports and reserves International oil companies abandoned TAZAMA also operates the Ndola Fuel exploration for oil in Zambia in 1992. At present, Zambia does not produce Terminal, adjacent to the Indeni Refinery; But in 2006, the government announced oil. However, consumption of petroleum the terminal has a capacity of around that hydrocarbon deposits had been
16 INVESTING IN zambiA | 2011 Energy confirmed in the country. Twelve sites exploits the hydro potential of the Kariba The most recent deal has seen ZESCO in the north west of Zambia near the complex, which consists of the Kariba Limited And Development Bank Of country’s border with Angola tested North and Kariba South power stations, South Africa (DBSA) sign a US$105.5mn positive for oil deposits, and six for natural Kariba dam and any future dams which loan agreement for extension works at gas; later, other sites in the western and may be constructed on the Zambezi river. Kariba North Bank power station. eastern provinces were found to possess hydrocarbon reserves, and in summer Another important entity is the Zambia is a net exporter of electricity to 2009, the government launched its first Copperbelt Energy Company (CEC), South Africa, Zimbabwe, the Democratic licensing round, offering 23 oil blocks for which supplies power to Zambia’s Republic of Congo, Namibia, Botswana, tenders from companies interested in mining industry. Other companies are Malawi and Mozambique, and earns carrying out petroleum exploration. In entering the sector – in October 2009, US$14.5mn a month from the trade. December 2010, the government started a private investor, Rural Electrification The country’s earnings from electricity issuing the licences. Britain’s GP Petroleum Authority, announced plans to build exports are set to rise significantly and Petrodel Resources, Glint Energy of small hydroelectric plants at Chavuma on completion of the proposed power the United States and Exile Resources and Mwinilunga in Zambia’s North plant upgrades. of Canada were chosen along with Western Province. Zambian firms Majetu, Barotse Petroleum Biofuels Company and Chat Milling Ltd to explore Hydroelectricity for oil and gas. The exploration will start At present, biofuels supply very little of in April 2011, after the end of the rainy The vast majority of Zambia’s electricity Zambia’s power, but the government is season. Further licences are likely to be comes from hydroelectric power. The seeking to foster the development of issued during 2011. country has three main hydroelectric these so as to reduce dependence on power stations: Kafue Gorge, Kariba petroleum and hydroelectricity. In October Domestic power supply North Bank and Victoria Falls. Between 2009, the government announced that them, these generate 1,608 of the it had drafted a biofuels regulatory and The majority of the Zambian population country’s total installed capacity of environment framework in order to gets energy from biomass such as wood 1,786MW – which is far short of the provide a basis for growth in the industry. fuel and charcoal. Next to biomass, country’s potential hydroelectric capacity Jatropha has been trialled in the country electricity is the main form of power of 6,000MW. Increased demand, mainly as a biodiesel-producing crop, with 10,000 used in the country, supplying 10% of the from the mining industry, has led to hectares currently under cultivation, and country’s energy needs. But just 22% of demand outstripping production at in April 2009, the Chinese government approached Zambia to plant 2mn hectares of the crop. The country’s potential as a The country’s earnings from electricity exports biofuel producer is great: with proper investment and skills transfer, Zambia are set to rise significantly on completion of the could produce 50mn litres of biofuels by proposed power plant upgrades 2013. The government is eventually hoping that 50% of the country’s diesel will be sourced from jatropha-based biodiesel the population has access to electricity the country’s mines. To address the once investments are completed and – 40% of the country’s urban population situation, the government has put in plantations are mature. and only 2% of those living in rural areas, place programmes to upgrade the and the dependence on wood fuel has led existing power generation infrastructure There are also significant opportunities to to fears of deforestation. The government and develop new plants. The largest capitalise on Zambia’s abundant sunshine. has established the Rural Electrification expansion is taking place at Kafue Gorge, As rural areas are rarely reachable through Authority to try to improve access to where the government is building a new the domestic power grid, solar energy, electricity outside urban centres – with the 750MW station at a project cost of with its low maintenance costs and high support of donors like Sweden and the about US$1.8bn, funded for the most reliability, is proving increasingly viable for Netherlands, who provided US$40mn for part by the World Bank and the African villages, clinics, farms and schools in remote the project in 2009, the authority hopes Development Bank (AFDB). The project regions. It is especially useful for telephone to extend access to 50% of the rural should be finished this year. At Kariba, a or radio relay stations and networks. population by 2030. In October 2010 the new plant generating an extra 360MW is World Bank approved a further US$20mn being funded by the Chinese government A number of solar installation projects fund for Zambia to improve access to and the Development Bank of South are already underway across the country. electricity in rural areas. Africa, who have offered finance of 121 community-based organisations and US$420mn and US$60mn respectively. nine schools in rural areas of Zambia are There are two major power entities in The Kariba plant is set to be completed to receive BP Solar panels to generate the country: ZESCO, a wholly owned in 2012. ZESCO Limited and TATA electricity for lighting, radio, television government parastatal that is responsible Africa have signed a US$270mn deal to and refrigeration in 2011. The panels will for 80% of Zambia’s electricity generation develop a power station with capacity of be supplied by BP Solar which has been and transmission, and the Central Africa 120MW at Itezi-Tethi, upstream on the awarded a contract by the Zambia Social Power Corporation (CAPC). CAPC Kafue River from the Kafue Gorge plant. Investment Fund.
2011 | INVESTING IN zambiA 17 Infrastructure
to decline in recent years, but its fortunes are set to improve with the help of a capital injection of US$39.3mn interest Developing a free loan lent by the Chinese government at the beginning of 2010. The Zambian and Tanzanian governments have agreed 21st century to concession the railway to a Chinese investor when a suitable bid is made. infrastructure Air transport Zambia has over 130 airfields, of which one- By Justine Doody third is owned by the government, with the rest in private hands. The country has four n order to keep up with the challenges Development Agency. The government international airports, Lusaka, Livingstone, of sustained economic growth in the hopes to involve private sector stakeholders Ndola and Mfuwe, which are administered Itwenty first century, Zambia like in road construction and operation under by the National Airports Corporation most of sub Sahara Africa has had to the national Public Private Partnership Limited (NACL), a parastatal wholly owned tackle the inadequacy of its infrastructural (PPP) policy launched in 2008. by the Zambian government. NACL needs. In this regard, the government with is looking to improve the quality of its the aid of donor assistance is upgrading Making tracks airports with the help of outside investors its infrastructure to create the requisite as well as through its own investment. It enabling environment for the economy to In landlocked Zambia, rail remains the was announced in January 2011 that the continue flourishing. dominant mode of transportation – the NACL has sourced around US$13mn rail system carries 83.4% of goods on local for the construction of a second terminal Building roads and international routes. The network is building at Livingstone International Airport split into two holdings. Zambia Railways that is expected to enhance the capacity Zambia has a road network of around (ZRL), the national railway of Zambia, for the Airport to handle international 91,400 km, of which 22% is paved with a total track of 1,266 km, runs flights. The Department of Civil Aviation and 78% is unpaved. Much of the road from the border with Zimbabwe to the (DCA) is the regulatory authority for network was constructed in the 1970s border with DRC, with branch lines into the industry – it is currently working on and has fallen into disrepair in the years the Copperbelt, the centre of Zambia’s a programme to bring the country’s air since; improvement of the road sector mining industry. Tanzania-Zambia Railways industry into line with International Civil was identified in Zambia’s 2002 Poverty (TAZARA), with total track of 1860 km, Aviation Organisation (ICAO) standards Reduction Strategy Paper as the single runs from Tanzania’s Dar es Salaam to on aviation safety oversight. most important action to be taken to Kapiri-Mposhi north of Lusaka in Zambia, combat poverty. The government has where it joins up with the ZRL system. A The air transport industry was liberalised since taken steps to address the problems third line, the Chipata-Mchinji railway was in 1995 following the dissolution of the posed by a lack of adequate maintenance completed in 2010 and provides a rail link national flag carrier, Zambia Airways, and insufficient oversight of the sector. between Zambia and Malawi. and now operates an ‘open skies’ policy. In 2006, to increase efficiency in roads The only Zambia-based carrier, Zambian management, the National Roads Board, Zambia Railways, formerly controlled Airways, unrelated to the old national the body in charge of road regulation by the Zambian government, was airline, started flying in 1998, but the and maintenance, was split into three concessioned to Railway Systems of company suspended operations in January separate entities: the Road Development Zambia in 2003. The company, headed 2009 citing high fuel costs. A new airline Agency (RDA), the National Road Fund by the New Limpopo Bridge Projects Zambezi Airline has now taken over most Agency (NRFA) and the Road Transport Limited Investment Consortium, was of the routes that Zambian Airway used to and Safety Agency (RTSA). awarded a concession to operate the fly. Commuter and air charter operations railway for 20 years, with an option to are increasing rapidly, but the country In 1998, the government put in place extend the agreement for a further ten needs to improve its air cargo capacity, the Road Sector Investment Programme years; in return, the company agreed to which has stagnated in the last ten years. (ROADSIP), a fifteen-year project to invest US$40mn in the rehabilitation modernise the road network. ROADSIP of the railway, with the World Bank Connecting with ICT is administered by the NRFA and the providing a further US$30mn in funding. programme is now in its second phase, Much remains to be done, however, to Teledensity in Zambia has plenty of room ROADSIP II, spanning 2004 to 2013 with bring ZRL’s rail infrastructure into line to grow: at the end of 2008, 28.76% of a total budget of US$1.6bn. In the first two with international best practices. Zambia’s population had access to a quarters of 2009, around US$145mn was telephone, 97.5% of whom were mobile disbursed by the NRFA for road projects, TAZARA is jointly owned by the subscribers. Government-owned Zamtel, funded by the Zambian government, the governments of Zambia and Tanzania. Built which has recently become part privatised, European Commission, the World Bank with Chinese assistance in the 1970s, the is the national fixed-line operator, and its and DANIDA, the Danish International railway’s infrastructure has been allowed subsidiary Cell-Z offers mobile services.
18 INVESTING IN zambiA | 2011 Infrastructure
The market leader, though, is Zain, the Kuwait-based mobile conglomerate, CASE STUDIEs which has around 80% of mobile market share. The nation’s number two mobile Njanji Commuter Train Description network is South African operator MTN, Services – Zambia This project is aimed at identifying an accounting for around 15% of the market. Development Agency investor to lead an initiative for the Description provision of mobile phone and other Internet penetration remains low, at 5.5%, This is a 13.5 km intra-city urban related value added services in the country. held back by limited fixed-line infrastructure. mass transit railway line in Lusaka The introduction of mobile internet in Objectives currently in a dilapidated state and • Increased investment 2007 has seen uptake increase, and Zamtel requiring rehabilitation and acquisition • ICT penetration is upgrading its network capacity by laying of rolling stock. The project will involve • Lower the cost of mobile phones locally 3,855km of fibre optic cable across the concessioning the railway infrastructure country, connecting provincial centres with train operations. The railway line and neighbouring countries. International is expected to be extended to cover Air Cargo Hubs – Lusaka bandwidth has been increased through other areas of Lusaka beyond the current – Zambia Development Agency the launch of the Eastern Africa Submarine termination stations. Cable System (EASSY), connecting Zambia Objectives Description through Botswana and Tanzania. • Create an intra-city rail system that will The government has committed to ease traveling across the city and further develop infrastructure to pave the way Zambia was one of the first countries to decongest the road network. for private sector development of Air establish an independent regulator for • Eventually reduce transport costs and Cargo Hubs in Zambia. This is mainly aimed at taking advantage of the country’s the telecoms industry in 1994, but the delays caused by road transportation central location within the region and also Communications Authority of Zambia providing a shorter connection flights from (CAZ) has for some time needed ICT – Mobile Telephony Asia and other parts of Africa to Europe, stronger powers to govern the sector – Ministry of South America and USA. effectively. In July 2009, the Zambian Communications & Transport government passed the Information and Objectives • To support the private sector in Communications Technology Bill 2009, • The licensee will cover the developing the inland ports in different which should give the regulator, now whole country parts of the country. • Submission of expression of interest renamed the Zambia Information and • To maximise the opportunity of creating and a project proposal to the Communication Technology Authority Air Cargo Hubs and inland ports for responsible agents and facilitation will (ZICTA), more sway in the industry – transit goods and cargo from the south be offered for setting up of business the regulator can now regulate tariffs to the north and the west to the east. for dominant market players as well as enforce agreements on interconnections. The Bill has also introduced a technology- create and improve infrastructure along post between Zimbabwe and Zambia neutral regulatory framework by offering the North-South Corridor, one of Africa’s will be reduced by at least 20%. This will unified services licences, enabling main trade routes. Running through boost regional and international trade, providers to offer multiple services like eight countries, Zambia, Botswana, South as it will open up access to markets and internet and mobile telephony under a Africa, Zimbabwe, Malawi, Mozambique, make it easier for Zambia to trade with single licence. Further, it provides for the Tanzania, and the Democratic Republic neighbouring countries and with the rest establishment of a Universal Access and of Congo, the Corridor will help Zambia’s of the world. Service Fund to promote the availability export trade by linking the country’s of telecoms and ICT in remote areas. Copperbelt to the ports of Dar es Salaam Another initiative, the Nacala in Tanzania and Durban in South Africa, as Development Corridor, seeks to improve Co-operation well as increasing the potential for trade infrastructure linkages between Zambia, on Corridors among the countries of the region. Malawi and Mozambique, running from the port of Nacala in Mozambique A major boost to the nation’s transport At the Lusaka conference, donors including through Malawi to the eastern and infrastructure was announced in the World Bank, the European Commission, northern parts of Zambia. In September April 2009 in the form of the North- the African Development Bank and 2010, the African Development Bank, South Corridor initiative. At a meeting the UK’s Department for International approved a loan of US$95.6 mn to fund in Lusaka, three regional economic Development (DFID) pledged US$1.2bn the Nacala Development Corridor Phase communities, the Common Market for for development on the North-South II with the aim of promoting economic Eastern and Southern Africa (COMESA), Corridor. More than 8,600km of road is growth and regional integration within the Economic Community for East due to be upgraded across the countries the SADC, through a reliable and Africa (EAC) and the Southern African of the Corridor, and the TAZARA railway is efficient transport infrastructure. The Development Community (SADC), to have 600 km of its track repaired. Travel European Commission also continues to agreed on modalities to put in place an times between Lusaka and Durban should support development on the Great East aid-for-trade programme with the aim fall by 10% once the Corridor is completed, Road, part of Zambia’s section of the that this will see intensive development to and transit times at the Chirundu border Nacala Corridor.
2011 | INVESTING IN zambiA 19 MIning
laws governing the sector have reduced investor risk, and rising commodity prices have led to Zambia enjoying a steady increase in FDI in recent years.
The government has also taken a number of steps to mitigate ecological damage through strict pollution controls, and to improve the conditions for workers and local communities, through strict health and safety legislation.
Copper and Cobalt
Copper and cobalt are the key commodities produced by Zambia, reserves of which are mainly found and produced in the Zambian copperbelt. Located between Zambia and the DRC, is one of the world’s greatest metallogenic provinces, containing the world’s highest grade copper and cobalt deposits. Zambia is ranked as the world’s seventh largest producer of copper, generating 3.3% of the western world’s production, and the world’s second largest Mining producer of cobalt (19.7%). A wave of privatisation in the 1990s increased profitability in copper Diverse opportunities production, and output has been rising steadily since 2004, with a 16% increase recorded in the first half of 2010. The lie underground country produced 740,000 tonnes of copper in 2010, and this looks set to By Cosima Cassel increase significantly in 2011 and beyond.
enowned worldwide for it’s industry is set to prosper in the medium Production of cobalt more than doubled copper industry, Zambia’s mining and long term. in the first half of 2010 to 4,057 tonnes R sector is the main contributor to from 1,967 tonnes in 2009, while exports the economy, accounting for 70% of the Mining Legislation of the metal increased to 3,889 tonnes country’s foreign exchange earnings. Zambia from 1,950 tonnes in 2009. is also a significant producer of cobalt, coal, Mining legislation was greatly simplified in nickel, tin and uranium, and boasts enormous 1995 with the introduction of the Mine and The high price of copper on the reserves of copper-cobalt ore, gold, lead- Mineral Act, which has created a favourable international market, alongside stable zinc, iron and gemstone resources, among investment environment, placing minimum tax policies, mean that key players in others, still underground. Industrial minerals constraints on prospecting and mining the mining industry are flocking to such as limestone, silica sand, phosphate, activities whilst allowing for international Zambia, and reinvesting profits made in barite, graphite and feltspar are also present arbitration to be written into development the country, leading to improvements in in Zambia. However, copper remains the agreements, should this be deemed production, improvements in efficiency dominant mineral export. necessary. Additionally, stable taxation and further increases in output.
The Zambian government has recently been granting licenses to international Case Study mining companies to prospect for non- traditional resources such as nickel, tin, Kansanshi manganese, diamonds, silver and uranium, Canadian mining company First Quantum the second quarter of 2012. The province’s in order to diversify away from copper Minerals operates the Kansanshi mine, secretary, Daniel Bowasi, said the new dependence. The country is receiving which contributed 230,800 tonnes to the Kalumbila mine would eventually compare increasing investor interest, with leading Zambia’s total copper output in 2010. The in size to Kansanshi, the country’s largest companies from China, India and Brazil company has recently announced plans to mine by output. and the West keen to secure a stake of open a new copper mine in the country in Zambia’s abundant reserves. The mining
20 INVESTING IN zambiA | 2011 MIning
at least 10 years of nickel reserves, and Case Study extension is a possibility.
Maamba Zambia has a history of gold mining on a The bulk of Zambia’s coal comes from the Bharat. The new owner spent US$550mn relatively small scale, with the twenty larger Maamba coal mine, an open-cast operation to acquire its controlling interest, of which deposits producing slightly more than 2t of in the southern part of the country near US$360mn was used to recapitalise the gold since 1902. The largest past producers Lake Kariba. This has 78.2mn tonnes of mine and to double production to 2mn are Dunrobin (990kg gold), Sasare (390kg), coal reserves and a production capacity tonnes a year. Around US$140mn will be and Matala (225kg). Dunrobin has recently of 1mn tonnes a year. In September 2009, allocated to a 300MW power plan, with been re-opened by Reunion Mining and is semi-state owned Zambia Consolidated estimated completion in 2013. Long term scheduled to produce 500-600kg gold per Copper Mines-Investment Holdings contract negotiations between power annum. More than 300 gold occurrences (ZCCM-IH), who owned the mine, sold a utility Zesco and Maamba have begun. have been reported throughout the 65% share to India-based company Nava country and some of these are currently being-re-evaluated. The other important metal production has been zinc and lead Zambia has been producing coal from the carbonate-hosted deposits of Kabwe which, with a total of 11Mt of continuously since 1967, yet much of ore containing 40% combined zinc and this resource still lies underground lead, ranks as one of the highest grades of such deposits in the world. Similar styles of mineralisation have been Coal Canadian company Denison Mines is recognised over a wide area to the north planning a uranium mine with a project of Kabwe. There is also mineralisation of Zambia has been producing coal cost of US$118mn in Siavonga District in manganese, silver, diamonds in Northern continuously since 1967, yet much of Southern Province, where reserves are and Central Provinces for which Zambia this resource still lies underground. Coal said to be in the region of 6,200 tonnes. Consolidated Copper Mines-Investment occurrences are confined exclusively to Holdings is seeking partners to conduct the lower Karoo Gwembe Formation, Further exploration licences were mineral exploration. within the series of fault-controlled granted to Denison Mines (Zambia) and basins that comprise the Mid-Zambezi African Energy Resources. In addition to Gemstones Rift Valley. The Maamba deposit occurs these, there are 140 large and small-scale within the Kazinze Basin and coal streams prospecting licences which include uranium Zambia has been an important source have also been discovered in the adjacent as one of the minerals to be explored. of gemstones to the world’s jewellery basins. The country has a working mine market for many years. It is renowned at Sinazongwe, the Chinese Collum Coal The authorities have introduced necessary for its fine emerald and amethyst, but Mine, as well as probable reserves in the environmental procedures to mitigate also produces an extraordinary variety of Luangwa Valley and in the western trough risk of uranium extraction; before mining gems such as garnet, tourmaline, citrine, system. These reserves are thought to starts, a developer is required to produce malachite, agate, aquamarine, heliodor stretch to several hundred million tonnes, an environmental impact assessment and many other beryls. though further exploration is needed to report and consult local communities in establish their full extent. the mining region. These minerals are mostly exported in their rough form since there are very Uranium Other Metals few cutting (lapidary) operations in the country, and export procedures have Uranium deposits have been located in Zambia is extremely rich in nickel, tin and been streamlined in recent years to allow a variety of geological environments in iron, with significant reserves of zinc and foreign buyers easy access to the market. Zambia. Exploration has been carried by gold, among others, as yet untapped. numerous companies focusing on potential The occurrence of diamonds and mineralisation in Karoo Age sediments, in The country is keen to promote the indicator minerals in Zambia highlights the Copperbelt and the Domes region of exploration and exploitation of these the country’s considerable exploration the Northwest Province. In May 2009, the metals, in particular nickel. It is hoped that potential. Alluvial diamonds are government finalised regulations approved nickel will one day take over from copper particularly abundant in the stable by the International Atomic Energy Agency as the country’s top metallic export. The cratonic Bangweulu Block and possibly on the mining, transportation and storage Munali nickel mine is currently the only the Kabompo area of western Zambia. of the material, enabling it to offer licences such mine in Zambia, and plans to reach to foreign companies for mining uranium. output of 1.2mn tonnes by 2012. The mine, Systematic exploration of the Ndola Rural In October 2009, a licence was granted to owned by Australia’s Albidon Ltd, halted area, utilising a combination of radiometric Australia-based African Energy Resources operations in 2009 after the price of nickel surveys and soil geochemistry, supported to begin exploitation of uranium deposits fell. However, following an investment by detailed mapping, offers considerable at Chirundu in Southern Zambia, where of US$37mn by China’s Jinchuan Group, potential for the discovery of additional resources are estimated at 33,000 tonnes; the mine resumed output. The mine has deposits of high-quality gemstones.
2011 | INVESTING IN zambiA 21 Tourism
Tourism Africa’s undiscovered gem By Natalia Debczak-Debski
ambia takes its name from the mighty Zambezi River which the country is on a strong path towards Z rises in the north-west corner of positive development in which the tourism the country before journeying south to form the country’s southern boundary. sector plays a vital role Victoria Falls, described by the Kololo tribe living in the area in the 1800’s as ‘Mosi- oa-Tunya’, ‘the Smoke that Thunders’, astonishing natural wonders, Zambia lures Contributing US$656.5mn in 2010 to GDP, has been carved by the Zambezi and is the adventurous traveler into her heart. It and expected to rise to US$1,943.3mn by a sight of magnificent beauty and a mark is no wonder that she is often referred to 2020, the Zambian government certainly of nature’s power. The attractions of this as ‘Africa’s Undiscovered Gem’. recognises the potential of the tourism extraordinary country also include Lake sector and it has been ranked as the Tanganyika in the north, mystical Lake The World Travel and Tourism Council has second most important economic sector Bangweulu with its endless swamplands, ranked Zambia 21 out of 181 countries in after agriculture on the government’s and the wild heart of the country, the terms of forecasted growth in the tourism economic development agenda. Luangwa Valley; whilst the scenically and travel economy. And, within sub- spectacular Lower Zambezi valley and the Saharan Africa, Zambia ranks an impressive The Ministry of Tourism, Environment far reaches of the Kafue, Africa’s largest 7th out of 42 countries. Statistics show an and Natural Resources (MTENR) goal game reserve, the Liuwa Plains and the increase of about 15-28% in the number is “to facilitate the development of a floodplains of Barotseland all blend into of visitors to Zambia. These figures diversified, sustainable and regionally the rich tapestry of this unique African highlight that the country is on a strong competitive tourism industry and ensure destination. With her extraordinary path towards positive development in a quality environment and sustainable diversity of wildlife, vast wilderness and which the tourism sector plays a vital role. utilisation of the country’s heritage and
22 INVESTING IN zambiA | 2011 Tourism
natural resources.” The Government‘s Because growth in tourism has largely the shores of Lake Tanganyika, the second agenda is that tourism will contribute to been restricted to the traditional tourist deepest lake in the world, which has job and wealth creation, foreign exchange destinations of Lusaka, Victoria Falls in been targeted for tourism development. earnings and that it is a catalyst for socio- Livingstone and the national parks of Through the development of the Kasaba economic development. Currently the South Luangwa, Lower Zambezi and Bay Tourism Resort Development Project tourism industry contributes 3.8% of Kafue, steps have taken to develop (KBTRD) the government is putting in total employment, 59,000 jobs, and the additional parts of the country that have place all the necessary incentives, such as numbers have been forecasted to rise to unique and untapped tourism potential. installing hydro-electricity, developing the 4.1% of total employment, 75,000 jobs An example is the Kasaba Bay located on airport to allow for commercial flights by 2020. The government has therefore made Case Study efforts to reform the tourism industry by ensuring that there are necessary legal Kasaba Bay Tourism Resort Project frameworks and pro-growth policies in Description place to support future development in This project centers on the development • Attract more than 12 world class hotels the sector. An example is the Tourism and of a tourism resort in the Northern to the area. Hospitality Act of 2007 which ensures Circuit of Zambia. This is an integrated that the sector will conform to the best tourism development in the range of Project Size possible standards in order to attract US$400mn to provide various tourist • US$400mn. visitors. Tax incentives have also been amenities. 20 tourism development • Kasaba Bay Tourism Resort Development introduced to create a more conducive potential sites have already been identified Project, specifically comprising Nsumbu with varying sizes of up to 150 ha. and Luena National Parks, Lumangwe environment for foreign tourism investors and Kabwelume and the towns of such as the zero rate of VAT on tour Objectives Kaputa, Mbala and Mpulungu. packages throughout Zambia and an • Attract both public and private investment allowance at 10% of the cost sector investment. of an extension to a hotel.
2011 | INVESTING IN zambiA 23 Tourism
and improving the road network to allow easy access to and from the area. Zambia is immersed in the age old rhythm The KBTRD is strategically located of Africa, steeped in traditional culture and to benefit from tourist inflows into Zambia from the East African populated by warm and friendly people region. Furthermore, there is a huge underdeveloped market within the bordering regional grouping of the Great the only other region in Africa outside Lakes region involving eleven countries the Serengeti where the awe inspiring through intra-regional travel. wildebeest migration takes place. Many safari operators such as Kiambi Safari and With over 45% of the water resource in Nyanja Safaris, make sure that the trips Southern Africa, which includes five vast which they organise are eco-sensitive to lakes, 17 magnificent waterfalls (excluding the local environment, wildlife, and local Victoria Falls) and plentiful rivers, there communities. Often a percentage of the are enormous opportunities for the profits are returned to local conservation development of water based tourism and and community projects with the aim adventure activities. There are plans to of promoting sustainability to ensure diversify tourism in the Livingstone area to that future generations can enjoy the encourage more tourist arrivals as well as African wilderness. to increase the length of stay for visitors, with projects that include a convention Zambia is immersed in the age old centre theme park and a hotel complex. rhythm of Africa, steeped in traditional Opportunities to promote adventure culture and populated by warm and holidays, white water rafting, canoeing, friendly people. Tourism continues rock-climbing, fishing and bungee-jumping to grow exponentially and there is at Livingstone, offer excellent tourism plenty of room for investment. Zambia investment potential. is one of Africa’s best-kept secrets, capturing the indefinable African Due to the widening tourism industry, essence that has earned it the title of the National Airport Corporation ‘The Real Africa’. Limited (NACL) has recently sourced about US$13mn for the construction of a second terminal building at Livingstone Case StudIES International Airport that is expected to enhance the capacity for the airport to Livingstone Convention Kariba Lake Waterfront handle international flights. Additionally, Centre – Livingstone, Development, Lakeside in January 2011, Egyptair Airlines Southern Province Golf Estate and Wildlife commenced its operations in Zambia by Sanctuary – Siavonga, introducing a direct four-times-a-week Description Southern Province The LCC will be an integrated project to flight between Lusaka and Cairo. Egyptair provide hotel accommodation, preferably Responsible Agent(s) – Ministry of Tourism Airlines Chairperson Alaa Ashour said in three classes: 3, 4 & 5 Star. It is aimed Environment and Natural Resources the introduction of the airline in Zambia at spearheading the development was a result of the continually improving and establishment of a world class Description investment climate and stability in conference centre and hotel facilities in An opportunity exists in Siavonga, one major macroeconomic indicators in Livingstone. Zambia does not have large of Zambia’s prime tourism centres. The the country: “the Zambian economy scale conferencing facilities that can hold proposed project entails the development has been growing and the prospect is 10,000+ theatre style sitting participants. and operation rights for fixed and floating positive and also the environment is very A 30 hectare site overlooking the Victoria hotels, game lodges, bush camps, lakeside stable which attracts investment in the Falls and Zambezi River has already been golf estates, villas, entertainment and aviation industry.” identified for this purpose. activity centres, retail outlets which include restaurants, bars, bistros, restaurants and Objectives staff housing. A medical facility, marina and Nearly 35% of Zambia has been • To be able to host national, regional and airport are also being planned all to be dedicated to National Parks and game international events being conventions, housed on the shores of the Lake Kariba. management areas providing the visitor exhibitions, festivals and cultural galas. with a diversity of wilderness habitats • To develop and provide world class Project Size: and ecosystems. It is not surprising that recreation facilities for both international • Proposed total investment is worth the country is the land of the legendary and local tourists. US$701mn. walking Safari which is one of the ultimate • Rights granted, in terms of the lease over ways to experience its raw, pulsating Project Size: land, estimated at US$55mn which environment. Zambia is home to some • US$150mn could also be used as collateral. of the last great herds of buffalo, and
24 INVESTING IN zambiA | 2011 Sponsors Our Partners MKP MKP Group of Companies was founded manufacturing of scooters for the African a boost by our trading arm that supplies in the year 1964 and is an expanding market: assembly of electronic products world class building materials such as construction company in Malaysia. such as scales and video phones and the cement, furniture, fittings and accessories construction of shipyards, docks, ships, off- as well as graphite. Over the next decade, our company share villas and luxury yachts. succeeded in landing major contracts not While we continue efforts to extend our only in our home country, but across the Our company also further extended business, we have turned our attention continents as well. our reach overseas while establishing to environmental sustainability and our ourselves as a Malaysian pioneer in the eco-tourism and agriculture division will In the 1980’s, MKP continued to grow and development as well as implementation be undertaking more environmentally branch out at a brisk pace. of state-of-the-art IT software, most conscious efforts to fulfil the needs of the notably in the medical industry. people that matter most to us. And before the year 1990 rolled by, our company emerged as one of the Before the dawn of the new millennium, Today, MKP is a growing giant with operations most innovative and diversified entities MKP’s productivity in the construction in over 18 countries and more than 20,000 while expanding its divisions to include sector and growing client base was given employees spread out across the globe.
ICB BANKING GROUP ICB Banking Group is an international As an international banking group, ICB • Best Bank in Albania 2010 Award for banking group with operations in Asia, Africa helps facilitate trade flows for their ICB Albania and Best Bank in Guinea and Europe. The Group, established in 1993, business clients between countries and 2010 Award for ICB Guinea, both has 14 banks today in these three continents. regions. The Group’s commitment to conferred by Global Finance and; customers and banking excellence has The Group’s holding company, ICB Financial resulted in the Group’s banks winning • Best Bank in Djibouti Award for ICB Group Holdings AG was incorporated various prestigious banking awards over Djibouti and Best Bank in Sierra in Switzerland in 2003 and subsequently the years. In 2010 ICB Banking Group Leone Award for ICB Sierra Leone, listed on the AIM market of the London won another eight prestigious banking conferred by EMEA Finance. Whereas Stock Exchange in 2007. awards from The Banker, EMEA Finance for ICB Mozambique, it won an and Global Finance: Honourable Mention. All ICB Banks operate as fully licensed commercial banks, with customers • Bank of The Year 2010 Award for ICB cutting across different segments of the Djibouti, Mozambique and Sierra market: consumer, small traders, SMEs Leone, all conferred by The Banker. and corporates.
Laraf ge Cement Zambia The Company was established in 1949 by companies. It was also the first company minority shareholders are well dispersed the Northern Rhodesian Government and to be listed on the Lusaka Stock Exchange with over 3,000 Zambian shareholders. the Colonial Development Corporation, (LuSE) and CDC was the majority now the Commonwealth Development shareholder. In 2007 Chilanga Cement changed its Corporation (CDC). Cement production name to Lafarge Cement Zambia to align commenced in 1951, with the installation In 2001 CDC reorganised its cement with the international Lafarge Group. We of two more kilns in 1956 and 1967. operations in Southern Africa to form have continued to establish ourselves as a Pan African Cement (PAC), which owned leader in the local manufacturing industry. In 1969 the Ndola Plant kiln was shares in Chilanga Cement in Zambia, The inauguration of our new plant at commissioned and in 1974 a second kiln Mbeya Cement in Tanzania and Portland Chilanga has enabled us to cater for the was added. The company was privatised Cement in Malawi. In May 2001 Lafarge ever-growing demands of the Zambian in October 1994 under the government acquired PAC from CDC and a further regional markets. privatisation programme aimed at 34% of Chilanga Cement through a enhancing efficiency of state-owned compulsory offer to minorities. The
2011 | INVESTING IN zambiA 25 KEY CONTACTS Key Contacts
Government Consulting agencies firms
Zambia Development Agency Grant Thornton Associates P.O. Box 30819, Lusaka P.O. Box 30885, Lusaka 10101 Tel: +260 211 220177/ 223859 Tel: +260 211 227722 Fax: +260 211 225270 E-mail: [email protected] Website: www.zda.org.zm KPMG P.O. Box 31014, Lusaka Tel: +260 211 228874/ 8 Zambia National Tourist Board Fax: +260 211 222861 P.O. Box 30017, Lusaka Tel: +260 211 222714 Fax: +260 211 225174 Deloitte & Touche E-mail: [email protected] P.O. Box 30030, Lusaka Tel: +260 211 228677/9 Fax: +260 211 226915 Zambia Revenue Authority P.O. Box 35710, Lusaka Tel: +260 211 223754/ 229214-8 PriceWaterhouseCoopers P.O. Box 30942, Lusaka 10101 Tel: +260 211 256471/ 2 Lusaka Stock Exchange Fax: +260 211 256474 P.O. Box 34523, Lusaka Law firms Tel: +260 211 228537/ 228391 Fax: +260 211 225969 E-mail: [email protected] Lukona Chambers Advocates Business associations P.O. Box 31160, Lusaka Tel: +260 211 254748 Fax: +260 211 253166 Zambia Association of Manufacturers P.O. Box 31992., Lusaka Tel: +260 211 229364/ 222709 Permanent Chambers Fax: +260 211 229371 P.O. Box 35702, Lusaka E-mail: [email protected] Tel: +260 211 225884 Fax: +260 211 225049 Zambia Export Growers Association P.O. Box 31705, Lusaka Chibesakunda & Company Tel: +260 211 221895 P.O. Box 30279, Lusaka Fax: +260 211 221895 Tel: +260 211 236319 E-mail: [email protected] Fax: +260 211 236478
Zambia Association of Chambers of Commerce & Industry P.O. Box 30844, Lusaka Tel: +260 211 252369 Fax: +260 211 252483 E-mail: [email protected]
Zambia National Farmers Union P.O. Box 30395, Lusaka Tel: +260 211 223222 Fax: +260 211 222736 E-mail: [email protected]
26 INVESTING IN zambiA | 2011 MAP
2011 | INVESTING IN zambiA 27 ABOUT About Africa Matters Ltd frica Matters Limited (AML) is passionate about Drawing on its knowledge, experience and network of making a sustainable difference for people in contacts both in Africa and the UK, AML offers a broad AAfrica, by supporting business based initiatives and range of specialised services for both the political and working with Africans to achieve a better tomorrow. business communities. In addition, AML works with multinational corporations and African governments to Established in 1997 by our Chairman, Baroness Lynda formulate policies designed to reduce the scourge and Chalker of Wallasey, AML is a unique and growing spread of dangerous counterfeit products in Africa. business consultancy focused on supporting commercial expansion and development in Africa. With two dedicated points of contact – a Business Director and a Researcher – based in the UK and With offices in London and Johannesburg and working on each client account, AML believes that this exceptional links to business, civil society and personal approach to clients’ needs is what makes our governments throughout the African continent, AML partnerships so successful. provides local support and timely information from those countries of interest to our clients. We do not publicise our client list. Confidentiality is of paramount importance to us. Whether an international The key benefit of the services that AML provides is that telecommunications giant, an agricultural input supplier, they are not prescriptive, but tailored to the business an infrastructure consortium, or a national government, needs of each individual client. our service remains as diverse as our clients.
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28 INVESTING IN zambiA | 2011 The conference is supported by