Investment in Zambia: Emerging Opportunities

LAGOS (Capital Markets in Africa) – Zambia’s economy has experienced a turnaround following the recovery of commodity prices (especially copper), better rainfall resulting in greater agricultural and hydroelectricity output, strong central bank measures to stabilize the economy, and robust pro-business fiscal policies. Specifically, copper has risen from US$5,000/tonne to over US$7,000/tonne, the Bank of Zambia has lowered the policy rate from 15.5% to 9.75%, and government has removed fuel subsidies and increased electricity tariffs. Consequently, the World Bank projects real GDP growth will be 4.1% in 2018, while Moody’s and the IMF anticipate +4% and 4% growth respectively. As a result of these improved macroeconomic conditions, there are opportunities for both domestic and foreign investors in various sectors including agriculture, energy, mining, telecoms, and financial services.

The following factors make Zambia a prime investment destination:

1. Absence of exchange controls – Zambia has no exchange controls thus investors are free to move capital into and out of the country. A relatively stable exchange rate over the years translates into reduced foreign exchange risk.
2. Political stability – Zambia is a politically stable country with relatively peaceful transitions of power. Furthermore, the current government has proven to be very pro-business, instituting austerity measures such as the removal of fuel subsidies and hiking of electricity tariffs.
3. Ease of doing business – Zambia ranks 6th in Sub-Saharan Africa on the World Bank’s ease of doing business index, up from 7th in 2016. There have been significant strides made to reduce the cost of doing business. For example, registering a company now takes no more than five days, while payment of taxes and customs can be done online.
4. Growing non-traditional exports – Although Zambia is largely dependent on copper, other sectors of the economy such as FMCG, telecoms, construction, and agriculture have been growing rapidly and have seen increased investment. The stock feed industry, for example, has been growing in excess of 20% per annum driven by strong poultry demand.
5. Positive demographics – Zambia has a young, rapidly growing population (3% in 2016) and a fast growing urban population (4.11% in 2016). These trends combine to create greater demand for goods and services.
6. A hub for the region – Zambia’s central location and membership in both COMESA and SADC give it unparalleled access to all eight of its neighbours and other markets beyond.

An extract from the INTO AFRICA August Edition: Driving Africa Opportunities. To read full article, please download by clicking: INTO AFRICA PUBLICATION: AUGUST 2018 EDITION.

Contributor’s Profile
Bryson Kacha is an associate at Pangaea Securities Limited. Pangaea is a leading Zambian full-service investment advisory and brokerage firm combining local knowledge with world-class expertise. The firm has raised over US$3.0 billion across Sub – Saharan Africa for clients in real estate, mining, FMCG, agriculture, TMT, financial services and hospitality sectors. Get in touch at www.pangaea.co.zm.