Investment climate in zambia

 

Economy

Zambia is among highly urbanized countries with about half of its population living in urban areas.  Zambia is among the fastest growing economies in Africa. According to World Bank Zambia’s economy has come under strain  in 2015 and 2016 due to external headwinds and domestic pressures that intensified. Gross domestic product (GDP) growth slowed to 2.8% in 2015 from 4.9% in 2014. The external headwinds include slower regional and global growth, which have reduced global copper prices. Domestic pressures include a power crisis from July 2015 to early-2016, impacting all sectors of the economy, repeat fiscal deficits that have weighed on investor confidence, and low and poorly-timed rains reduced agricultural incomes and increased food prices in 2015. The World Bank forecasts that growth will remain at 2.9% in 2016, before improving in 2017 (4%) and 2018 (4.2%) as the power situation improves alongside  better output  from both the agriculture and mining sectors. The World Bank projects that Zambia’s GDP growth will reach 4% in 2017, compared to 3% in 2016. The GDP per capita stands at $1,300 as of 2015. As according to Bank of Zambia annual inflation declined to 7.5% in December 2016 from 18.9% in September 2016.

Urbanisation rate

The 2010 Census of Population and Housing indicated the population of Zambia as 13 million with urban population of over 5 million people.  According to World Bank the population of Zambia was projected at 16 million as of 2015 with annual growth rate of 3.1%. The population is therefore projected at 17 million people in 2017.

Corruption

In 2016 Zambia got a score of 38% and was number 87 out of the 176 countries that participated. It got the same score in 2015

Security

The security in the country is fine and a visitor can move around the country without any serious problems. It is important to note Zambians are very friendly and helpful. But as it is the case in most countries you are advised not to walk around carrying high value items.

Unemployment and skilled labour

According to the 2014 Labour Force Survey half of the population live in urban areas. The unemployment stood at 7.4 % of the economically active population.  It is estimated that about one-tenth of the employed population are in the formal employment leaving close to 90 per cent in the informal employment. Much of the labour force in Zambia is not adequately  skilled to support the economic development of the country.

Credit rating

Moody’s credit rating for Zambia downgraded to B3 from B2 with negative outlook from stable in April 2016 because of a combination of both external and internal shocks in the economy.

Attitude toward Foreign Direct Investment

The Zambia Development Agency (ZDA)  was established in 2006 under Act No. 11 of 2006 and is responsible for fostering economic growth and development in Zambia through promoting trade and investment and an efficient, effective and coordinated private sector led economic development strategy. The agency also has the challenge to develop an internationally competitive Zambian economy through innovations that promote high skills, productive investment and increased trade.  It provides one stop shop for assisting investors in Zambia.

The Multi- Facility Economic Zone (MFEZ) is a Government programme that  was introduced in 2005 with assistance of   Japan International Corporation Agency (JICA). It  has created a  platform for attracting significant domestic and foreign direct investment (FDI) into the country.  MFEZs  are   special industrial zones for both export-oriented and domestic-oriented industries have been set up in Zambia.  The MFEZ incentives are non discriminatory and applies fairly to all eligible investors be it from Zambia or outside Zambia. The declared zones include Chambishi, Lusaka East, Lusaka South, Lumwana;  Ndola  and Roma . The zones are managed by Zambia Development Agency 

Land

All land in Zambia is vested in the President on behalf of the people of Zambia. The President may alienate land vested in him to any Zambian. The Lands Act, Chapter 184 of the Laws of Zambia, places a number of restrictions on the President’s allocation of land to foreigners. The Zambia Development Agency (ZDA) Act  however makes provision for ownership of land by investors.

Doing business in Zambia

The highlights of World Bank score of doing business in Zambia is summarised as follows;

Topic World Bank 2017 rank World Bank 2016 rank Change
Overall 98 94 -4
Starting a business 105 96 -9
Dealing with Construction Permits 78 67 -11
Getting electricity 153 109 -43
Registering property 145 170 25
Getting credit 20 19 -1
Protecting Minority Investors 87 85 -2
Paying taxes 58 56 -2
Trading across the boarders 161 161  
Enforcing contracts 135 133 -2
Resolving insolvency 83 89 6

The country made some improvements in registering business and resolving insolvency cases.

Restrictions on Foreign investment

The government requires all internationally licensed firms operating a domestic cellular telephone network to offer ten percent of shares on the Lusaka Stock Exchange, per commitments made by agreement prior to entering the market. Telecom investors are required to disclose certain proprietary information to the ZDA as part of the regulatory approval process. The ZDA board  reviews all  applicants  to determine the extent to which the proposed investment will help create employment and the development of human resources; the degree to which the project is export oriented; the impact the proposed investment is likely to have on the environment and, where necessary, proposed environmental mitigation activities, in accordance with the Environmental Protection and Pollution Control Act; the possibility of the transfer of technology; and any other considerations the Board considers appropriate.  The applicant has a right of appeal to the Minister of Finance and National Planning and  the High Court of Zambia against the decision.

Remittance Policies

There are currently no restrictions or limitations placed on foreign investors in converting or transferring funds associated with an investment (including remittances of investment capital, earnings, loan repayments and lease payments) into freely usable currency and at a legal market-clearing rate.

International Arbitration

The courts in Zambia are independent, but contractual and property rights enforcement is weak and final court decisions can take a  long time. Zambia has a Commercial Court, a division of the High Court, to deals with  commercial disputes. The Bankruptcy Act Cap 82 of the Laws of Zambia provides for the administration of bankruptcy of the estates of debtors and makes provision for punishment of offenses committed by debtors. The Arbitration Act Chapter 40 was passed in 2000. The Chartered Institute of Arbitrators (CIArd) was established in Zambia in 2011 and currently has over 60 members.

Intellectual Property Rights

The legal framework for protection of intellectual property rights is in place.

Key natural resources

The key natural resources include copper, cobalt, zinc, lead, coal, emeralds, gold, silver, uranium, hydropower, petroleum, tin, nickel, bauxite, phosphate, natural gas and  fishing among others.

National Parks

The Zambia Wildlife Authority (ZAWA)  is mandated under the Zambia Wildlife Act No. 12 of 1998 to manage and conserve Zambia’s wildlife, which covers 31 percent of the country’s land mass. ZAWA endeavors to integrate the wildlife policy with economic, environmental and social policies to ensure effective contribution to sustainable national development. Zambia has the following National Parks;

  • Blue Lagoon National Park
  • Isangano National Park
  • Kafue National Park
  • Kasanka National Park
  • Lavushi Manda National Park
  • Liuwa Plain National Park
  • Lochinvar National Park
  • Lower Zambezi National Park
  • Luambe National Park
  •  South Luangwa National Park,
  • Lukusuzi National Park
  • Lusaka National Park
  • Lusenga Plain National Park
  • Victoria Falls National Park
  • Mweru Wantipa National Park
  • North Luangwa National Park
  • Nsumbu National Park
  • Nyika National Park
  • Sioma Ngwezi National Park
  • South Luangwa National Park
  • West Lunga National Park

Investment Climate in Zambia has been summarized to include the following

Development Partners of Zambia

Double taxation Treaties of Zambia

Exports of Zambia

International Trade Agreements with Zambia

Investment Authority of Zambia

Investment Incentives in Zambia

Investment guarantees in Zambia

Investments opportunities in Zambia

Natural Resources of Zambia

Trading partners of Zambia

Zambia Shipping Status

Zambia Stock Exchange

For more reading

http://siteresources.worldbank.org/EXTAFRSUMAFTPS/Resources/ICA004.pdf

http://www.state.gov/e/eb/rls/othr/ics/2013/204763.htm

(http://www.state.gov/e/eb/rls/othr/ics/2012/191266.htm )

(http://www.oecd.org/investment/investmentfordevelopment/37987613.pdf)

(http://www.zambiaembassy.org/index.php?page=doing-business-in-zambia)

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