Trade and Investment

Since the early 1990s, Zambia has pursued market oriented policies, with the country becoming increasingly integrated in the global economy. This has been done through the privatization of state enterprises, removal of unnecessary controls, deregulation of interest and foreign exchange rates, reduction of tariffs, strengthening of the financial sector, and reforms on policies of repatriation of tax profits, dividends and capital.  Zambia’s economy is on track and has been expanding since 2002.  The government’s target is to reach a 7% annual economic growth rate and to reduce inflation down to 7%.   The government has deliberate ongoing processes of improving the investment climate for doing business and promotion of exports.   

Trade

Barriers to trade have been substantially reduced, export licenses are mere a formality, while import controls are maintained solely for statistical purposes.  The main trade policy instrument is done through customs duties, which have even been reduced to support private sector growth and export competitiveness.  In addition, a number of incentives have been introduced to develop export industries.  The Zambia Revenue Authority is responsible for the administration of customs duties while commercial banks issue export and import licences.  

Although the country’s main exports remain metals and minerals, particularly copper and cobalt, emphasis is also on non-traditional exports such as vegetables, flowers, cotton, tobacco, cement and textiles. Major imports include crude oil, mining equipment, machinery, iron steel, vehicles, and transport equipment.

Zambia’s export market is buoyed by the country’s membership in regional organizations such as the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC).  Zambia’s participation in international trade has also boosted the country’s competitiveness in global trade. Currently the European Union countries, China, South Africa, Democratic Republic of Congo, Kuwait, United Arab Emirates, India, Japan and the USA remain Zambia’s major trading partners.  Although Zambia is a landlocked country, it has easy access to the sea ports of Durban in South Africa, Dar-es-salaam in Tanzania and Walvis Bay in Namibia.

Investment

Zambia’s stable macroeconomic stability, a conducive and enabling environment for private sector and industrial growth, political stability, peace and tranquility are the hallmark for the country’s positive investment climate.  According to the 2009 World Bank’s Doing Business Report, Zambia is among the best seven (7) African countries in doing business.  The cost of doing business has been reduced significantly while the country has one of the most open economies on the continent.

Specific investment opportunities exist in the following areas:

Agriculture

Zambia has very good arable land for both extensive and intensive cultivation of various crops.  Some 56% of Zambia’s total land area is available for agricultural production and only about one sixth of total arable land is under cultivation mostly by small-scale farmers.  Much of the available land for agriculture is near urban areas which are close to transport links for accessing local and international markets.  Water is in abundance, with some 45% of Southern Africa’s water resources found in Zambia. Untapped potential also exists in the irrigation of farmland.  Good rainfall, conducive temperature, rich soils, and abundant sunshine make agriculture a very attractive sector for investment in Zambia. Special incentives also exist for those intending to invest in this sector.  

Investment prospects abound in the growing of wheat, sugar, coffee, cotton, tobacco, vegetables, flowers and maize as well as livestock (such as cattle, poultry, sheep, pigs), dairy farming and fisheries. Fertilizer and farm equipment supply and production also have significant potential.

Mining

Zambia has vast mineral reserves with an estimated 10% of the world’s known reserves of copper which is exported to China, USA, UK, Japan, Italy, India, Thailand and some other EU and Asian countries. Around the world copper is used for electrical wiring, computer chips, in plumbing, heating and cooling facilities, and in automobiles.  Zambia is one of the world’s largest cobalt producers, supplying 20% of the world’s cobalt. Copper and cobalt together represent 80% of Zambia’s export earnings, and contribute over 10% to the country’s Gross Domestic Product.  In addition to huge copper and cobalt reserves, Zambia possesses a variety of lead, zinc and precious and semi-precious minerals, such as emeralds, amethyst, aquamarine, diamonds and gold. Deposits of marble, granite, ferrous metals, clay, limestone, iron and phosphate also remain underexploited. 

Large-scale mining is widespread, with existing prospecting licences and new applications being issued.  World-renowned mining companies from Canada, Australia, China, UK, South Africa and USA are involved in mining and prospecting operations in Zambia.

Energy

With its vast water resources and coal reserves, Zambia offers abundant investment opportunities for hydroelectric power generation, supply and distribution.  Investment in the energy sector has been slow and existing power generation does not match with current demand as a result of increased mining activities on the Copperbelt Province in recent years.  The problem has been aggravated by the ongoing costly rehabilitation of existing power plants.  Currently, the country’s hydropower resource potential stands at an estimated 6,000 Mega Watts (MW) while current production is only 1,786 MW resulting in a very big shortfall.  With this deficit in power generation, the country requires massive investment in the energy sector. The Zambian government is, therefore, looking for serious partners and companies which are ready to invest in this sector. 

Manufacturing  

Manufacturing is one of the top performers and a priority growth sector in the Zambian economy and contributes about 11% to the national Gross Domestic Product and 10% to employment.  Manufacturing in Zambia is one of the most attractive sectors for investment as it has all the vital required elements in place such as raw materials, required labour force, abundant land and a good banking and financial system.  Measures have been put in place to support growth within the sector including the creation of Multi-facility Economic Zones (MFEZs), credit provision and industrial skills training.  Potential areas of investment include cement production, textiles and clothing apparels, agro-processing, processed and refined foods, leather products, wood processing, plastics, vehicle parts and assembly, chemicals, refining of petroleum, and metal and engineering works.  There is exemption on customs duty on the importation of most capital machinery and equipment used for manufacturing while many other incentives exist for the sector. 

Tourism

The tourism sector is one of the largest exchange foreign exchange earners in Zambia and is a major source of economic growth.  Zambia is one of Africa’s top tourist destinations in Africa and as such investment opportunities exist in tourism facilities such as hotels, lodges, and safari operations.  Untapped tourism investment opportunities also exist in all the 19 National parks and 34 game areas as well as the 23 million hectares devoted to the conservation of an amazing variety of animals. Business opportunities further exist in the tourism transport such as air charters, car hire, travel agencies and tour operations management, sports, game ranching, adventure holiday packages, and organized tours.

Physical Infrastructure

Potential investment opportunities in physical infrastructure such as housing, roads, and communications abound. The construction sector in Zambia is rapidly growing mainly due to construction of residential housing, investments in the mines, road construction and other civil works.  The country also has a very robust Road Sector Investment Program (ROADSIP) in which both local and international road construction companies participate although emphasis is on quality. The country is also looking for serious investors to venture into the air transport industry to support the ever growing tourism sector and increased commercial activities.