Diversifying Investment into Zambia

With Zambian Ministers and officials traveling the world and welcoming delegations to the country, we are beginning to see the fruits of their labour with a considerable diversification of investment beyond the dominant extractive industries. The mining sector still currently makes up 89% of foreign direct investment (FDI), yet agriculture, energy, manufacturing, communications and infrastructure are starting to attract international investors.

On August 2nd, Trade Minister, Hon. Felix Mutati, was in Washington DC at the AGOA forum challenging American investors not to miss out on the huge opportunity, stating, “Africa is the new frontier for investment.” Just a couple of weeks earlier, President Rupiah Banda was in Turkey signing new agreements with President Abdullah Gul and in July President Lula Da Silva of Brazil visited Lusaka – signing eight agreements to formalise cooperation between Zambia and Brazil.

This all reflects how Zambia, with its growing political and economic stability, is pushing its status as a trusted international trading partner, especially with the emerging BRIC powers. The common view is that China’s Africa strategy is based on the exploitation of the mineral resources of poor countries; yet AfricanBrains considers this as an unbalanced and somewhat limited view of the new African investment reality. Nowhere is this better demonstrated in Zambia where the country is designated by the Chinese as a Special Trade and Economic Cooperation Zone. Over 160 Chinese companies have invested in Zambia, often with the backing of the China-Africa Development Fund.

Recently, LAP Greeen Networks of Libya bought 75% of national telecoms operator ZAMTEL for $257 million and committed an additional $127 million for further investment into improving and expanding the communications networks. Indian investment has also been considerable over recent years including the likes of telecom operator, Bharti Airtel stating it would commit $150 million to Zambia following its $9 billion purchase of Zain Africa.

Zambia holds 40% of sub-Saharan Africa’s surface water and a huge boom in the hydropower sector is anticipated with over $9 billion worth of turnkey projects in the future, including China’s commitment to the Kafue Gorge rehabilitation.

In the future Zambia will be a net exporter of electricity to surrounding countries and in the mining sector we are seeing the burgeoning growth of mineral processing and the development of secondary industries. The new economic powers such as Brazil, Russia, India, China, Turkey and GCC countries are alert to the opportunities and seemingly stealing a march on the traditional European and American powers.