This month, Africa’s eye’s were on Zambia. #ZambiaDecides trended on Twitter as the southern African country took to the polls for closely fought election. In the end, Patriotic Front’s Edgar Lungu triumphed over Hakainde Hichilema of the United Party for National Development.
Over recent years, Zambia has experienced high rates of Foreign Direct Investment (FDI), and Lungu (Zambian president since 2015) plans to boost funding further. We explore why Zambia is receiving increasing amounts of investment, and why you should invest in the future.
For the past four years, Zambia’s government has invested extensively in it’s infrastructure, thus increasing potential for increased logistics performance.
Zambia has a huge resource of copper. It’s the largest copper producer in Zambia and the eighth largest in the world. Canadian miner First Quantum Minerals is expected to double output at its Kalumbila mine. Glencore is due to bring a shaft online at its Mopani mine.
Copper isn’t Zambia’s sole industry. Zambia is the world’s second-largest supplier of emeralds and the country’s rich with cobalt, manganese, gold and uranium. Several government incentives aim to attract new investors to the sector. Recently, chinese mining companies have been quick to move into the Zambia, along with several Chinese yellow metal suppliers.
Shopping malls in Lusaka reflect a growing consumer sector, with approximately 1.5 million people forming an urban retail market (out of a population of 15 million).
In recent years, construction has also been successful. It has been the fastest growing GDP sector over the past two years. Demand has been serviced by various firms. Chinese constructors have taken on some of the biggest infrastructure projects.
The government aims to increase reliance on the private sector, in order to boost Zambia’s struggling energy supply. Six new power plants are currently at various stages of development. Collectively, they will add 1730mw to the grid, mostly by private producers. Total generation in the country will almost triple, though most are several years from completion.
As said power limitations ease, investment in mining and other industries is likely to pick up.
Despite being hit by a power crisis; the manufacturing industry has grown over the past three years. Much manufacturing relies on the Africa Growth and Opportunity Act’s (Agoa) provision of duty free access to the US market. There is a strong state incentive campaign to promote new investment, including zero corporate tax and import duties for the first five years of profitable operation (if located in certain zones).
Zambia’s stability when compared with the Democratic Republic of Congo has led to a vibrant industrial zone on the border between Zambia and the Katanga province. The mineral-rich province contains basic commodities like cement. Furthermore, much of Katanga’s copper ore is smelted in Zambia
Zambia has offers a strong policy environment for investors. This includes no exchange control, no capital gains tax and a fairly good legal system which protects property rights. Zambia has an investment guarantee regime backed by the World Bank and is a member of the International Convention on the Settlement of Investment Disputes.