Zambia’s government is targeting the diversification of its economy, particularly by boosting the agriculture and manufacturing sectors and adding value wherever possible, as well as developing its infrastructure. Minister of Information Chishimba Kambwili discusses the opportunities and challenges ahead.
Zambia has experienced a phenomenal 7.5% average GDP growth over the past decade. What do you believe is the image foreign investors see when they look At Zambia?
Zambia is a very safe investment destination compared to other African countries, especially in the southern Africa region. Zambia boasts of being a very politically stable country with a low crime rate. Crime is minimal and its people are kind and welcoming. We are also endowed with many natural resources.
Our mainstay of the economy has been the copper mining industry, but in the last 10 years or so we have been trying to diversify the economy from dependence on copper. We have a lot of land – if you travel from the northern to the southern parts of our country, you will see a lot of forests, indicating how rich the soil is. Our soils are well suited for agriculture purposes. By and large, we need to invest more in value crops that can add to our exports in order for us to earn more foreign exchange from non-traditional exports.
Our major trade export has been copper, but I think that, by and large, in relation to the plummeting global commodity prices, Zambia has not been spared. Copper prices have plummeted from $7,500 to about $4,500, which has had a very negative impact on our exchange rate. In the last six to seven months we have seen our exchange rate rising from K4.50 to K10.90 per $1.00 as a direct result of the falling copper prices on the world market.
So the way forward for Zambia is to attract investment in the agriculture sector with a bias to create value-addition in the manufacturing industry. Our country is mainly an importing country in terms of commodities. We import many things from China, South Africa and East Africa, but we need to start producing some of the same goods that are produced in China and South Africa to enable us balance our foreign exchange payments. Some products that we import from China can easily be manufactured in Zambia, but as the Zambian government does not venture into business, we expect the private sector to take initiative with these opportunities.
To address this issue, we are setting up Multi-Facility Economic Zones (MFEZ). We are encouraging both local and foreign investors to invest in these zones for the purpose of manufacturing goods for export. These zones will be tax-free. The country will be benefit from the inflow of foreign exchange that will be realized from the export of goods manufactured in these multi-economic zones. At the same time, the country will enjoy creation of much sought for employment. To sum up, our main focus as a government now is to diversify our economy, focusing on the agriculture and manufacturing sectors.
Prior to 1991 – when the Movement for Multi Party Development (MMD) took over from the then United Nations Independence Party (UNIP) government founded by President Kenneth Kaunda and introduced a liberalized economy – most of the industrial facilities were closed. For example, Ndola was the industrial hub of the Copperbelt. There was a strong presence of renowned foreign industrial companies like Dunlop, Johnson & Johnson, and Lever Brothers doing their manufacturing right in here in Zambia. However, when the economy was liberalized many of these companies shut down. In the wake of this, our dependence again returned to copper exports.
Now we are trying to revisit the whole situation so that we can diversity into mainly the manufacturing industry and agriculture.
The country is facing challenges as a result of the depreciation of the currency and the low prices of copper on the global market. The government has a plan in place to reform the economy through diversification and foreign direct investment. What do you think are the main challenges for achieving these goals and what can be done to address these challenges?
Technology is an example of a challenge we face. Technology in Africa in general trickles in at a very slow pace. Every time there is a new technological improvement in the world, Africa receives those technological improvements quite late. That is why you find that when we attract foreign investment or people who come to invest, they often come with their own employees in order to transfer the technology to the local workforce.
If you look at human resources, Zambia has an educated cadre of citizens. We’ve been training people at university level since 1965. We have many graduates, some of whom are just roaming the streets without employment. In terms of human capital, we have a lot of qualified people that can do the jobs but they may just be lagging behind in terms of technology. We have a challenge in terms of technology and that in attracting foreign investment, we must realize that one of the major factors to work on is developing our rural workforce.
When the Patriotic Front party came into power, we began massive infrastructure development – like building schools and hospitals in rural areas and improving our capacity for power generation. Most of the rural areas that are very good for agricultural purposes do not have proper infrastructure because the development of this country during the rule of President Kaunda seem to have stagnated when the MMD party came into power in 1991.
During this period, little was done to invest in infrastructure development. This creates a problem when you are looking to attract investment. For example between 2005 and 2008, there was a problem in Zimbabwe. The government instituted a land policy, where they were taking land from the white farmers and redistributing it to the indigenous black people. Some of these white farmers from Zimbabwe wanted to invest in Zambia, but unfortunately when they came to Zambia they realized that in most of the rural areas where there was available land there were no proper schools, little electricity and no good roads. As a result, these people ended up investing instead in Botswana and Namibia.
To counter that challenge, we as the government have embarked on a massive program of infrastructure development. In the roads sector, we have a very ambitious program called the Link Zambia 8000, where we are going to build 8,000 kilometers of roads to open the rural areas, connecting the districts and provinces. This would allow agriculture investors to come to these areas to find proper roads and good schools.
No farmer or investor would want to go and invest in an under-developed area because the people that are going to be employed in those areas and even the families of the investors would want to go school and to a good hospital. This is why, to counter this challenge, the government has embarked on massive infrastructure development in the road, energy, education and health sectors.
What’s is your national plan for communication in the next three years?
In terms of communication, our government has prioritized communication as one of the key economic factors that need to be further developed. Today, it is considered old fashioned for people to communicate using letters via the post office. People want to send and receive communications automatically, so infrastructure relating to the internet, telephones and general communication has been enhanced. The government has built communication towers in almost all of the chiefdoms across the country to try and enhance much-needed infrastructure for communication as a way of increasing the ease of doing business in a cheaper and more conducive communicative environment.
Taking into account your background in England, what do you bring from your past experience to your ministerial position in Zambia?
A lot. When I was in England, I was exposed to quite a number of technologies. When I went to live in England, there were few computers in Zambia. When I was working for the mines at Zambia Consolidated Copper Mines (ZCCM), we had one computer room in the whole industry where everybody who wanted to use a computer had to book in advance. Sometimes you were put in the queue for weeks at a time. When I came back to Zambia following my time in England, I urged the cabinet to invest in communication tools such as computers, internet and general connectivity. internet connectivity has grown by leaps and bounds in our country in the last 10 years. At the time, we only had one internet service provider called Coppernet but today we boast more than 10 companies who offer internet connectivity.
Almost all the mobile phone providers are now offering internet services, and today almost all the people that have mobile phones are able to receive email and are able to browse internet using mobile phones. There has been a lot of improvement in terms of internet accessibility by the people. Now we have introduced an information communication technologies (ICT) curriculum in schools. Previously people would only begin to learn about computers after they left university – not even in universities were students computer literate. We have invested in computers in schools so that children from primary and secondary schools may become computer literate; when they go to tertiary education they are already computer literate. When they go into the employment market they are already computer literate, which makes it much easier for them to compete in the job market.
This is important for the development of the nation. I remember the days of the post office and letter writing era when the quickest mode of communication was the telegram; you go to the Post Office, they type and send the telegram and then send a messenger to go and call a person to come and collect a piece of paper to explain what the other person has communicated from the village. It was very cumbersome, but today one can go on a computer and within a minute the information is relayed.
These developments also affect other areas of the economy, like the banking sector. You don’t need to go to the bank to check your balances on the account; you can pay using the internet. You can transfer money to anywhere in the world thanks to the internet.
Communication is very important for the development of the world and I think Zambia has not lagged behind in terms of that development. We almost meet international standards, although people in the rural areas do not have the tools such as computers as we haven’t taken electricity to all parts of the country, meaning therefore that we still have a large part of our population that are not computer literate. We have taken a deliberate policy, like I have said, to invest massively in infrastructure development with a view of taking electricity to all parts of the country.
Let’s discuss the relationship between the UK and Zambia. These countries share a long history together, and, more recently, the British Chamber of Commerce opened this year in Lusaka. Where do you place these relations today?
By and large, the UK, or generally Europe, has not been very fair to Africa in terms of investment. Today, much of the investment comes from the Far East, China and India. We used to have so many British companies operating in Zambia. We were colonized by Britain, and I think if the British did not at one point leave Zambia and forget about the development of the country, we could have developed much more rapidly.
At some point we felt left out by the British and that is why we ended up going to China for investment, but you cannot compare Chinese investment to British investment. In terms of paying salaries and the welfare of the people, the British pay well and look after the people very well. On the contrary, you have to fight with Chinese investors for better working conditions. It is typical of them as they come from a background of socialism and paying better salaries is not part of their tradition. When the Chinese come to the part of Africa that was colonized by the British, with citizens that learned the British way of doing things, it becomes very difficult to accept the Chinese way of operating.
What can be done to strengthen the UK-Zambian relations? What can be done to attract more English investors?
It is a question of being aggressive in marketing our country to the British and creating partnerships that can improve our way of living. What has been lacking is a focus on economic diplomacy in our past foreign policy. Our emphasis was on political rather than economic diplomacy. It is high time we began to encourage economic diplomacy, in which our embassy markets our country vigorously to the British. For instance, some of the products that the British order from the Caribbean are better produced in Africa at a cheaper price. It’s a question of us as Zambians being very aggressive in marketing our goods to the British, and of course engaging the Britons to come and invest in Zambia, especially in the agriculture sector.
We have an abundance of valuable land – I have traveled from Southampton to Scotland, you rarely find a bush – all the areas are covered. You cannot even know where the town ends and where another starts. Here in Zambia the bush will tell you that we have now left one town and will be going into another. In England, the land is occupied by farms that produce high-value crops that can be exported to the world. Zambia is well positioned to attract to investment in this sector.
What do you expect to gain from Zambia’s presence at the Global African Investment Summit in London in December?
There has always been unfair trade balance between Africa and Europe – the British included. Europeans want to have their products sold in Zambia but very few of our Zambian products are sold in Europe. What we need to do is to find a balance so that there are more goods on an equivalent basis, in which the British import products from Zambia as much as the Zambians import goods from England. There must be a balanced trade between the two countries because if we are buying more of the British goods and the British are not buying our goods then the end result is what we now have, where we have a lack of foreign exchange on the market as a result the Kwacha will continue depreciating against the dollar.
What would be your final message?
My appeal to British investors is to come and invest in Zambia. You will find value for your money. The production costs in Zambia are not as high as the production costs in England. When you look at salaries that are paid, the minimum salaries in England and the minimum salaries in Zambia vary greatly; the cost of labor in Zambia is negligible. Additionally, the cost of electricity and transport is much lower here in Zambia than in England. This package of advantages is very attractive to the British investor. The market for the goods that will be produced by these investors is massive. Zambia is landlocked but land-linked, with a wide market in the region, including the Congo, Angola and Tanzania.