World Report

The agricultural sector led the way in attracting investor interest in 2003

lear signs of economic stability in Zambia are boosting investor confidence in the country. Statistics from the Zambian Investment Centre show a significant increase in investment in 2003, with a pledged total of £67.4 million – up from £46.5 million in 2002.

An important development is that the government’s increased focus on agriculture has begun to pay off, producing an upsurge in investor interest. The agricultural sector recorded the highest investment pledges last year, totalling just over £20.4 million, followed by manufacturing (£17.4 million), transport (£11.2 million) and tourism (£9.5 million).
Foreign investment has tended to focus on the mining sector since the industry was privatised. But the authorities are equally keen to attract overseas interest to the other major sectors, in line with their objectives of economic diversification and job creation. At the same time, investment is needed to build up the country’s transport, telecommunications and energy infrastructure.

“Foreign investment is extremely important to Zambia,” says Ng’andu P. Magande, Minister of Finance and National Planning. “The opportunities are here. We have the most liberal exchange controls in the world. People come here to invest and make money, and when they make profits they can take them. We want them to bring in skills and foreign currency, employ our people and have a multiplier effect on the local economy.”

The government has pledged to create an enabling environment in which all obstacles to investment are swept away. Dipak Patel, Minister of Commerce, Trade and Industry, says: “We are trying to get to the point within the next couple of years where all these barriers have been removed and it is much easier to do business here.

Dipak Patel
Minister of Commerce, Trade and Industry

‘Within the next couple of years all the barriers will have been removed’

“Our challenge is to attract both local and foreign investment into the country in the key resource-based sectors. We need to produce value-added products and expand our export base in directions other than copper, in areas such as electricity, tourism, horticulture and floriculture.”

Mr Patel lists Zambia’s central location in the region, ready availability of land, abundant water resources and huge potential for agriculture as being among its main competitive advantages. The country also has an enviable record of political stability. “Zambia is a peaceful country,” says Mr Patel. “We have never had a civil war.”

The significant lowering of high interest rates – a deterrent to investment in the past – has given further encouragement, and the government has been urging commercial banks to reduce their lending rates even more.

A comprehensive medium-to-long term Financial Sector Development Plan (FSDP) is being drawn up with the aim of creating a more efficient financial system. Meanwhile performance indicators at the Lusaka Stock Exchange (LuSE) have been showing an upward trend, with market capitalisation up by 209 percent to £425 million at the end of 2003 and the volume of shares increased by 280.9 percent to £174.5 million.

Foreign participation on the LuSE increased, with net foreign capital inflows positive at £1.26 million compared to an outflow of £0.14 million in 2002.