ZAMBIA TRADE AND INVESTMENT ENHANCEMENT PROJECT (ZAMTIE)

Contract Number 690-C-00-00-00283-00

Supported by: United States Agency for International Development (USAID)

Implementing Contractor: Nathan Associates Inc 2101 Wilson Boulevard, Suite 1200 Arlington, VA 22201

Sub-Contractors: Cargill Technical Services, Inc (CTS) Aurora Associates International, Inc Independent Management Consulting Services, Ltd JE Austin Associates, Inc

TRADE AND INVESTMENT OPPORTUNITIES IN AGRICULTURE

Prepared

by

John C Keyser Terry Heslop James Abel

December 2001

55 Independence Avenue PO Box 39298, Lusaka Tel: 251177/251127 Fax: 251141 Email: [email protected]

Zambia Trade and Investment Enhancement TRADE AND INVESTMENT OPPORTUNITIES IN AGRICULTURE

TABLE OF CONTENTS

Table of Contents ...... i List of Data Tables ...... iii Currency Equivalents ...... iv Weights and Measures ...... iv Acronyms and Abbreviations ...... v Membership of Regional Trade Blocks ...... vi Preface………………………………………………………………………………………..vii Acknowledgements………………………………………………………………………….viii Map of Major Towns……………………………………………………………………….…ix Map of Agro-Ecological Zones………………………………………………………………..x

INTRODUCTION...... 1

I. OBJECTIVES AND SCOPE...... 1 A. Approach...... 1 B. Presentation ...... 2 C. Methodology ...... 3 D. Limitations ...... 3 II. BACKGROUND TO THE STUDY ...... 4

III. OVERVIEW OF MAIN FINDINGS ...... 5

PART ONE – ZAMBIA’S INVESTMENT CLIMATE AND TRADE OPPORTUNITIES ...... 8

I. INVESTMENT AND TRADE PROMOTION...... 8 A. The Zambia Investment Centre...... 8 B. The Export Board of Zambia ...... 9 C. Other Promotion Bodies ...... 10 D. ZAMTIE’s Strategic Niche ...... 11 II. ZAMBIA’S INVESTMENT CLIMATE...... 12 A. Natural Resource Potential...... 12 B. Historic Context ...... 13 C. Macroeconomic Considerations ...... 14 D. Other Constraints ...... 15 III. SOURCES OF INVESTMENT FINANCE...... 19

V. TRADE ANALYSIS ...... 21 A. Export Performance...... 21 B. Major Markets...... 25 VI. MULTILATERAL TRADE AGREEMENTS ...... 31 A. COMESA Free Trade Agreement...... 31 B. SADC Trade Protocol...... 32 C. African Growth and Opportun ity Act...... 33

Page i Zambia Trade and Investment Enhancement TRADE AND INVESTMENT OPPORTUNITIES IN AGRICULTURE

VII. INVESTMENT PLANNING ...... 34

PART TWO – AGRICULTURE PERFORMANCE AND COMPETITIVENESS …………………………………………………………………………………..37

I. PRIORITY AGRICULTURE S ECTORS ...... 37 A. Strategic Selection Criteria ...... 37 B. Identification of Priority Commodities ...... 38 II. OPPORTUNITIES AND CONSTRAINTS IN OTHER SECTORS...... 39 A. Grains ...... 40 B. Oilseeds ...... 45 C. Traditional Cash Crops ...... 46 D. Livestock Products...... 49 E. Other Products...... 53

PART THREE – INVESTMENT STRATEGIES FOR PRIORITY SECT ORS55

I. COTTON ...... 55 A. Recent Performance...... 56 B. Market Opportunities ...... 59 C. Bottlenecks and Leverage Points ...... 60 D. Strategic Interventions ...... 61 E. The Way Forward...... 63 II. COFFEE...... 65 A. Recent Performance...... 66 B. Market Opportunities ...... 68 C. Bottlenecks and Leverage Points ...... 70 D. Strategic Interventions ...... 71 E. The Way Forward...... 72 III. PAPRIKA ...... 72 A. Recent Performance...... 73 B. Market Opportunities ...... 74 C. Bottlenecks and Leverage Points ...... 76 D. Strategic Interventions ...... 77 E. The Way Forward...... 78 IV. HORTICULTURE ...... 78 A. Recent Performance...... 80 B. Market Opportunities ...... 83 C. Bottlenecks and Leverage Points ...... 84 D. Strategic Interventions ...... 86 E. The Way Forward...... 88 BIBLIOGRAPHY ...... 90

APPENDIX 1: L