Last published date: 2020-09-01
There are a number of commercial opportunities in #Zambia’s emerging economy, to include services to a rising middle class in urban population centers. In general, most sectors are dominated by a few large players, leaving room for new market entrants. Market opportunities exist in the following sectors: • Infrastructure: Building and construction is the largest industrial sector. Zambia has a national housing deficit of 1.5 million housing units. Opportunities in the sector are led by demand in the mining industry, infrastructure development, residential buildings, and offices. • #Energy: Demand for electricity has grown at an annual rate of about three percent, and generation development is starting to grow. #Investment #opportunities exist in electricity generation, especially in the off-grid market, upstream and downstream #petroleum, and #renewable #energies. Demand for renewable energy options has grown significantly. The government is considering policies that will incentivize a willing-buyer/willing-seller model for power purchase agreements (PPA). However, the financially distressed electricity parastatal ZESCO remains the main off taker of large #PPAs, and #ZESCO has run up #substantial arrears to existing PPAs. This will likely limit large-scale development in the short term. • #Mining: #Zambia is the second largest copper producer in #Africa and seventh largest in the world. #Foreign direct investment (FDI), since privatization of the sector in 1996, totals more than $8 billion. Opportunities exist in exploration, mining services, water management, engineering, construction, and environmental services. Zambia is also home to other precious metals such as gold, silver, gemstones (amethyst, aquamarine, emerald, and tourmaline), coal, and industrial minerals. Immense potential exists for both extraction and value-added industries. • Information and Communication Technology (ICT): The government has embarked on reforms in and liberalization of the ICT sector. Opportunities include provision of retail fiber optic, mobile, internet service providers, software development and sales, and ICT business parks. • #Tourism: Zambia shares the world-famous Victoria Falls with Zimbabwe; one of the Seven Natural Wonders of the World and the sector makes up seven percent of GDP. Zambia boasts 20 national parks and 34 game management areas. There are opportunities to build hotels to address Zambia’s general lack of room capacity in tourism and mining regions, in addition to #hospitality services, #infrastructure #development, and tourism site operations.
Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Last published date: 2020-09-01
The Zambian economy is heavily dependent on copper mining and rain-fed agricultural production, which exposes the economy to external vulnerabilities such as variances in global copper prices, climate change and seasonal weather patterns. Zambia has a relatively small domestic market that is spread across a country slightly larger than the state of Texas. The Zambian government amassed huge debt loads from 2012 to the present, and the IMF 2019 Article IV report noted Zambia’s public debt load was unsustainable under current policies and the risk of external and overall debt distress was “very high.” Debt levels continued to rise in 2019 as Zambia moved forward with numerous infrastructure projects, mainly financed by Chinese firms. A Cabinet-approved moratorium on new non-concessional debt in December 2019 slowed foreign debt accumulation, and in 2020 the government pursued efforts to renegotiate, restructure, or cancel portions of its foreign debt. As of June 2020, the Zambian government and the IMF were in discussions on the fiscal stance and policies needed for the IMF to move forward on the government’s request for emergency support under the Rapid Credit Facility. The government’s outstanding domestic arrears of several billion dollars to private contractors continues to constrain private sector growth, as does an ever-changing tax and regulatory environment. Other challenges include policy inconsistency, pervasive corruption, and high domestic lending rates. Government borrowing due to persistently high budget deficits also continues to crowd out the public sector, further hampering economic growth and investment. Labor rates also present a challenge; while hourly wages are low, actual labor costs are considered high for the region, driven up by low labor productivity, stringent labor laws, and generous benefits for formalized employees, and a shortage of skilled labor. While improvements have been made at key border crossings, including the opening of integrated customs services at the Zambia-Zimbabwe border at Chirundu, the DRC-Zambia border at Kasumbalesa, the Zambia-Namibia border at Katimamulilo, the Zambia-Botswana border at Kazungula, the Zambia-Tanzania border at Nakonde, the Zambia-Malawi border at Mwami, and the Zambia-Mozambique border at Chanida, the cross-border movement of goods remains slow. This, combined with high fuel prices and an insufficiently developed and maintained primary, secondary, and tertiary road network, creates steep transportation costs. Government policies with respect to business and trade can change often and without prior consultation, such as abruptly announced agricultural crop export bans. Similarly, market-distorting subsidies in the agriculture sector inhibit greater involvement by and growth of private enterprises in the sector. Zambia reported the first confirmed cases of COVID-19 on March 18, 2020 and as of August 24, the country had a total 11,148 confirmed cases and 280 confirmed deaths. Zambia introduced a series of measures - including closure of three of its four international airports, school and university closures, and closure of non-essential services such as restaurants, bars, gyms and large public gatherings - to curb the transmission. The government later eased restrictions, opening all of its international airports. While Zambia’s international land borders remained open to blunt the pandemic’s negative impact on trade and the economy, quarantine or other testing requirements were at times imposed and lockdown and quarantine policies in neighboring countries further impacted and slowed trade flows. As a result, economic sectors such as manufacturing, mining and other commodity supply chains have been disrupted, and sectors such as tourism, transportation, retail, and restaurants have experienced extensive economic and job losses.
Market Entry Strategy
Generalizes on the best strategy to enter the market, e.g., visiting the country; importance of relationships to finding a good partner; use of agents.
Last published date: 2020-09-01
Relationships are key to finding and evaluating good business partners. Company representatives need to visit Zambia to maximize prospects for successful market entry, evaluate business partners and prospects, develop advocacy relationships with officials, and to actively promote their company's brand and services. U.S. companies usually either license through local representatives, or import/export through (often South African) intermediaries. Whichever market entry strategy is chosen, businesses should bear in mind that entering the market will require local expertise on legal and regulatory issues.
Discusses key economic indicators and trade statistics, which countries are dominant in the market, the U.S. market share, the political situation if relevant, the top reasons why U.S. companies should consider exporting to this country, and other issues that affect trade, e.g., terrorism, currency devaluations, trade agreements.
Last published date: 2020-09-01
Zambia is a politically stable, multi-party democracy, rich in natural resources with an estimated population of 17.2 million, 42 percent of which live in urban areas. The #country has experienced 20 years of positive economic growth and has an expanding middle class, but the combined impact of unsustainable debt loads, a series of droughts and follow-on impacts on agricultural and energy production, currency depreciation, and the COVID-19 global pandemic is #projected to significantly slow growth and economic activity. GDP growth was 1.9 percent in 2019, and the #IMF #projects growth will contract by five percent in 2020. The IMF’s 2019 Article IV report projected Zambia’s debt would climb to 96 percent of GDP in 2020, though these estimates pre-date the pandemic. Inflation remained persistently outside of the Bank of Zambia’s (BoZ) medium target range of six to eight percent in 2019 and 2020, reaching 15.9 percent in mid-2020. The #economy enjoys #liberalized prices on most items and does not have currency controls. Zambia’s main #export partners in 2018 were Switzerland (due more to the location of commodity traders, rather than actual exportation), China, Singapore, Democratic Republic of Congo (#DRC) and South Africa. During the same period, Zambia’s main import partner was South Africa, followed by China, United Arab Emirates, India, Democratic Republic of Congo and Japan. In 2019, Zambia’s total imports from the United States were $99.3 million, compared to $195.4 million in 2018. These consisted primarily of machinery, rubber, and vehicles. In 2019, about $83.0 million in Zambian exports went to the United States, compared to $182.7 million in 2018. These consisted almost entirely of copper, cobalt, precious stones (primarily emeralds), and cotton. The United States has signed a trade and investment #framework #agreement with the Common Market for Eastern and #Southern Africa (#COMESA), of which Zambia is a member. #import #export #b2b #b2g #b2c #sales #importer #exporter #global #trade #globaltrade #tendersgo