. Chisanga

By JUDITH NAMUTOWE –
FOREIGN Direct Investments (FDIs) are an essential requisite in any country’s quest for accelerated and sustained socio-economic development.
FDIs are an essential element in that they can boost the country’s efforts to uplift standards of living for the citizens including the vulnerable groups in society.
Since the 1990s, Zambia has continued to register positive strides in FDI inflows as a result of high investor confidence due to the improved investment environment.
FDIs have continued to play a critical role in the country’s economy, contributing to increased capital inflows, rehabilitating the copper industry, enhancing the production and exports of non-traditional products and services.
However, Zambia has not used the FDIs effectively in promoting development and reducing poverty.
In promoting FDIs, one of the Government’s objectives has been diversification to reduce the economy’s heavy dependency on copper exports.
Despite this goal, copper remains very dominant, in part due to the significant increase in the mineral’s global market price since 2004.
Zambia has over the last seven years recorded more than $26.7 billion worth of pledged FDIs.
Recently, newly appointed ZDA director general Patrick Chisanga said a total of $26.7 billion FDI investment pledges were committed to Zambia between 2007 and mid 2014.
Of the $26.7 billion, only $6 billion has been actualised representing 25 per cent of the total pledges, which is not an impressive ratio.
In terms of employment generation, in 2007, 10,251 jobs were to be created but only 6000 were actualised representing 60 per cent.
ZDA had hoped to register more than 150,000 jobs by 2013, but only 48,000 new jobs have so far been created representing 30 per cent.
The ZDA, therefore, is faced with the challenge of further stimulating the flow of FDIs into the country.
It is expected that stimulating the flow of FDIs into the country would be one of the focus areas for ZDA to ensure investment pledges are realised.
Mr Chisanga says the agency is reflecting on how the institution performed between 2007 and 2013.
“You can see that in 2007, we had $3 billion in FDIs, which dropped to $939 million, and it dropped further in 2009 to $695 million and then there was a rise in 2010.
“This needs to be reflected upon to so that we learn from what happened in this particular period,” Mr Chisanga says.
There was an increase of up to $1.7 billion in 2010 and then the figure dropped to $1.1 billion in 2011 because of insecurities about the future of the country following general elections that year.
“But it has started rising again. In 2012, Zambia scored $1.7 billion and as of last year, we have actually gone up to $1.8 billion,” Mr Chisanga explains.
In terms of sectors, mining and quarrying took the biggest chunk of investments at 53 per cent, while manufacturing carried 27 per cent despite the privatisation of a number of industries over the years.
The banking industry has also recorded significant growth in the economy taking about 11 per cent in FDIs.
“Agriculture is still at two per cent and this is an area we are prioritising. We want to see more investment coming into agriculture sector,” he said.
There were a number of selected projects that have been facilitated in 2014 and these include Meysen and Borowski Company Limited of Lusaka involved in infrastructure development which has committed a total of $2.9 billion with a projected job creation of 7,694.
Pick ‘n Pay has also applied for additional facilities in areas where they are not present pledging a total of $27 million with job targets of more than 300.
Manjeet Cotton in Chipata projects to be operating a Ginnery at the cost of $6.5 million with employment generation of 84.
Global Industries in Ndola is positioned to start processing cooking oil and ZDA has finalised Investment Promotion and Protection as per arrangement relating to the commissioning of its investment at the cost $70 million which will create 340 jobs.
IHS Zambia Limited ICT Infrastructure Development will also invest $170 million and create 45 jobs, while Enviro Board Corporation Zambia Limited of Lusaka involved in the construction of houses will invest $95million and targets to create 146 jobs.
One of the Public Private Partnership (PPP) investments is the Nansanga Farming bloc, a core venture on 17,500 hectares of land in Serenje area which would soon be advertised to invite private sector partners.
It is against this background that ZDA wants to build on the foundation which has already been laid in terms of investment attraction.
Mr Chisanga says building on this foundation entails first of all understanding the mandate of the ZDA in terms of the Zambian economy.

• In promoting FDIs, one of the Government’s objectives has been diversification to reduce the economy’s heavy dependency on copper exports.

“We have the mandate to promote economic growth and development of Zambia and that means we are cross cutting the responsibilities across the Zambian economy.
“Government has prioritised a number of sectors and these are agriculture, mining, tourism, energy, manufacturing and infrastructure development.
“And our job as ZDA is to ensure that we direct all FDIs and very importantly local FDIs into these priority sectors so that they can grow,” Mr Chisanga said.
At the moment, for instance, the ZDA has observed that FDIs into Zambia have been reducing in the last couple of years.
ZDA want to analyse why this is happening. Zambia was in the last 10 to 15 years seen to be a very attractive investment prospect, attracting fresh capital but this has slowly declined.
“So the agency is trying to analyse why and is looking at the legal framework, for instance, looking at the issue of incentives, how easy it is for an investor to come into Zambia and receive institutional support in setting up their investments.
“On the other hand ZDA has also come to know that a number of potential local investors have felt marginalised, that they have never been given sufficient attention or for that matter, incentives and support to launch themselves into business and grow, so that is another area of focus,” Mr Chisanga says.
The agency should focus on the local investors and local stakeholders in the country should join hands and help review the weaknesses of the organisation and map out a strategy that will build further investor confidence.