By MAIMBOLWA MULIKELELA-
SWORN in as the seventh President on August 24, 2021 at Heroes Stadium in Lusaka, Hakainde Hichilema’s key focus was to rebuild Zambia’s economy for the betterment of its citizens.
He understood the task ahead of him that for Zambia to attain its full economic potential, it required financing opportunities for it to be able to develop its industrial base that will stimulate growth and jobs.
Creating industries or a strong manufacturing base, agro-processing, mining and a thriving energy sector, Zambia needs huge investments and long-term financing to be able to achieve its set objectives.
Therefore, building strong relationships with pan-African multilateral financing institutions like the African-Import Bank (Afreximbank) are necessary to push the country’s industrialisation agenda.
Afreximbank was established to provide innovative structures that deliver financing solutions to support the transformation of the structure of Africa’s trade, accelerating industrialisation and intra-regional trade, thereby boosting economic expansion in Africa.
This also provides an opportunity for financing solutions for businesses that require resources to undertake Greenfield projects or expansion programmes.
HH attends IATF in Durban, South Africa in November 2021.
To debottleneck some of the challenges Zambia has been facing in the past with regard to financing, President Hichilema attended the second edition of the Intra-African Trade Fair (IATF) in Durban, South Africa alongside other Head of States in November last year.
There, he outlined his administration’s plans, which included value addition taking a centre stage in all economic sectors as opposed to continued exports of raw materials as it was the case in the agriculture and mining, among other sectors.
President Hichilema believes that institutions like Afreximbank should promote and support domestic and regional investment before African countries can look to the global stage for financing.
Oramah Visit HH in December 2021…Battery Electric Vehicle plant birthed.
This was followed by the visit of Afreximbank President Benedict Oramah and his delegation to Zambia in December last year, where they met with President Hichilema, commercial banks, corporate and some State Owned Enterprises (SOEs) who could potentially benefit from the programme and facilities of the bank.
This culminated in the need to set up a Battery Manufacturing facility in conjunction with the Democratic Republic of Congo (DRC), both of which contribute close to 80 per cent of global cobalt supplies.
Cobalt is the major material needed for battery manufacturing, yet Zambia and DRC supplies these to other countries to use for processing and manufacturing of batteries.
Oramah visit HH in July 2022 ….$250m investment earmarked for Battery Electric Vehicle.
During the visit to Zambia in July this year, President Oramah met with President Hichilema, where the bank revealed that it will provide an initial investment of about US$250 million earmarked for Zambia’s first ever Battery Electric Vehicle (BEV) manufacturing plant.
Afreximbank is promoting the establishment of this manufacturing structure under an industrial park model but with the two countries DRC and Zambia providing a common policy framework.
This is part of Prof. Oramah’s push for Africa to begin to create additional value from its own resources.
To this effect, the Government has agreed to make land available to be used to develop the industrial park to be financed by the Fund for Export Development in Africa, a subsidiary of Afreximbank.
Developing such a value chain would enable Africa to capture a larger share of this expanding battery electric vehicles market projected to be worth 8.8 trillion by 2025 and 46 trillion by 2050.
Furthermore, the bank announced over US$1.5 billion pipeline trade finance will materialise to support Zambia’s key sectors.
The bank is considering projects in key productive sectors of the economy ranging from mining, energy and manufacturing for the purpose of value addition aimed at promoting sustainable economic development.
Currently, Afreximbank financial exposure to Zambia stood at in excess of US$200 million to the financial service sectors, in support of Government initiatives and the corporate.
During the African Union (AU) meetings, Afreximbank regional chief operating officer in charge of Southern Africa Humphrey Nwugo indicates that close to US$500 million had significantly progressed internally through its credit process for disbursement.
“Since the visit of Mr President in December, there has been a significant ramp up of Afreximbank activities in this market. We have received a lot of inquiries coming out of Zambia a lot in terms of how we can support.
“In the short term we shall be seeing a lot of funding support by Afreximbank to Zambia in support of key sectors of the economy,” Mr Nwugo says.
Afreximbank was pleasantly surprised with some of the findings as Zambia is replete with yet untapped opportunities which the bank shall potentially assist to unlock.
Another area of focus will be support to eliminate import of fertiliser through the establishment of the fertiliser plant, with the bank providing financing worth US$300 million.
The fertiliser plant will have an installed capacity of 1.5 million tonnes against the national demand of about 800,000 tonnes and this will see Zambia become the net exporter of fertiliser in the region.
“We are supporting a very strategic import substitution of fertiliser; Zambia is dependent on fertiliser imports pretty much of 99 per cent of its requirement are imported so there is a fertilizer company that is coming up which will have an installed capacity of 1.5 million tonnes,” Mr Nwugo says.
Once fully implemented this would also result in a reduction in the prices of fertiliser on the market.
Furniture Industry on Cards
At the invitation of President Hichilema, Afreximbank is looking at the possibility of funding the development of Zambia’s furniture industrial park.
Demand for the Mukula has been growing for several years, particularly in Asia, with China being one of the biggest rosewood consumers, which is widely used in processing furniture.
Prof. Oramah indicates the furniture project was introduced to Afreximbank in July this year by President Hichilema based on the work the bank did, where it built an industrial park housing the furniture companies, which was now the largest exporter.
A preliminary review on Zambia’s wood resources will be undertaken to determine its commercial viability.
“We are looking at the possibility of developing a furniture companies industry here in Zambia.
President Hichilema told us that Zambia can be a destination for investment because the country has a particular type of wood he mentioned so when our people come for the BEV project one of the things they will be looking at is this particular opportunity,” Prof. Oramah says.
The bank is impressed with the wide ranging socio-economic reforms President Hichilema is embarking on to ensure that Zambia’s economy turns around through enhanced trade and investment under the Intra African Trade framework.
$2.4bn investment portfolio to support Zambia’s economic sectors.
Currently, the bank has an investment portfolio of US$2.4 billion to support economic sectors in the country through various projects.
“Afreximbank is ready to help Zambia set up a battery manufacturing plant due to the country being one of the biggest exporters of Cobalt,” Prof. Oramah says.
He pointed out that Afreximbank will ensure Zambia and DRC, who are the largest exporters of Cobalt, benefit from their resources.
In view of this, President Hichilema believes Afreximbank has a key role to play in helping to turn around Zambia’s economy through resource mobilisation for investment in various sectors of the economy.
He says the bank has a duty to help and support African countries like Zambia to turn around their economies through enhanced trade and investment for the benefit of the local people.
So far so good, President Hichilema’s first year in office is bearing fruits with regard to attracting investment and financing to develop Zambia’s industrial base.