Zda Spotlight - April 2009

Zda Spotlight

Zambia Development Agency

Issue 2

April 23 2009

Inside this issue:

LUMWANA MINE COMMISSIONED

Palm Oil Production To Increase

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UNIDO To Boost Investment Promotion

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Workshops To Address Investment Bottlenecks

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Challenging The Downturn

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Market Access For MSEs

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MSE Sector Growing

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Plant Expansion On Target

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Points of Interest • “Our partnership is good and shows how Government can work with the private sector,” Paul Robillard, outgoing MD Zambia Sugar • “From the very day we commenced our investment in 1996, Equinox had always taken the long-term view because we believe it is the only way to be credible, serious and that investment can be successful,” Craig William, President Equinox • “Zambeef is the most diversified company and is going forward; their motto should be From Zambian Soils to the Dining Tables," Minister of Commerce Trade & Industry, Mr. Felix Mutati Quote “We're getting hurt, but I'm a long-term investor,” Prince Alsaud

dent Banda said the opening of Lumwana Copper Mine, the largest copper mine in Africa, had offered the country a number of lessons through hard times. He noted that the country had learnt from the project that perseverance was a must for success; success was not easy; and witnessed the value of mutual trust and partnership between Equinox and Government.

Statue Depicting Unity Was Unveiled By President Banda

recently said the mutual trust between government and Equinox had resulted in a world class development that had opened up North Western Province as a new economic hub. And Equinox president and co-founder, Craig Williams said the positive government policies and mining reforms attracted his company to invest in the sector at a time when copper prices had fallen and most mines were struggling. Presi-

After 12 years of project development and investment of over U$1 billion Lumwana Mine has finally been commissioned turning a backward area into a modern economic hub providing investment opportunities and employing thousands of people. President Rupiah Banda who commissioned Lumwana Copper Mine in Solwezi

Mr. Banda said despite the challenges that Equinox faced in raising investment funds it managed to secure a U$664 million debt finance package from international banks in 1996. “This underscores the belief the company has in the government and the people of Zambia to place such large amounts of money at risk in a Greenfield project,” he said. The President added that Zambia would encourage more investors such as (Continued on page 2)

Tourism Investment Increasing Investment in tourism is quickly taking the lead with planned investment in the sector valued at U$72,820,000 representing 65% of the total planned investment in April. The Licence Permits and Certificates (LPC) Approval Committee of the ZDA approved 25 applications with planned investment valued at U$110,397,169 from

various sectors. Planned investment in the manufacturing sector was at 15% valued at U$16,910,000 while investment in agriculture was in the third place with U$7,631,169 as pledged investment. The other sectors were agriculture, real estate, service, education, health, construction and transport. 1,721 jobs opportunities are expected to be created

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from the investment. The increase in investment in the tourism sector is due to the promotion of the diversification programme by government and the attractive incentive package in the sector. Others in the sector are planning for the World Cup in 2011 and are anticipating an overspill from the games and an increase in occupancy.

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Palm oil Production To Increase World prices of palm oil are currently at their highest in twenty five years and have a direct link to petroleum price. Zamanita in its efforts to diversify is looking to exploit this opportunity by setting up Zampalm Plantation in Muma, Mpika district. A roll out of 3,500 hectares is envisaged to be completed by the end of the year. The company has set its sight on creating the largest palm oil plantation in Southern Africa that will make the country self sufficient in the production of edible oils, generate employment, earn foreign exchange and empower the local community. In investing in this project, Zamanita will become the first mover in palm oil production, reduce raw materials imports, take advantage of economies of scale and get carbon credits. Recently Zamanita signed an Investment Promotion and Protection Agreement (IPPA) with the Government, which guarantees Government support, tax relief and facilitation through the ZDA, to ensure that the project is successfully implemented. The agreement valued at U$27 million covers rehabilitation and expansion works to increase operations at the plant site, to satisfy both local and international demand. The investment will create 500 new job opportunities.

UNIDO To Boost Investment Promotion A delegation from UNIDO was in the country from 14th to 17th April to help the Zambia Development Agency (ZDA) accelerate its ability to address challenges related to investment promotion, enhance its policy advocacy role and design effective strategies for attraction of foreign direct investment. The delegation was in the country on an African Investment Promotion Network mission (AfriIPAnet), a UNIDO response to the needs expressed by African Investment Promotion Agencies for technical assistance and other forms of support to help them confront the challenges of globalization and the intense competition for foreign direct investment. The Zambia Development Agency is the focal point for AfrIPAnet and will be coordinating the AfrIPAnet programme in Zambia that will include investor surveys, capacity building for relevant public sector institutions and partnership exchange programmes, to upgrade domestic enterprises to become competitive suppliers and subcontractors.

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Workshops To Address Investment Bottlenecks The Zambia Development Agency (ZDA), in collaboration with BizClim, an ACP-EU Business Climate Facility initiative will be holding sensitization workshops on investment facilitation for public officers and local community leaders in seven provinces. The purpose of the workshops, slated for April 15 to 13 May 2009, is to sensitize public officers and local community leaders on the importance of promoting productive relationships with investors and the steps they need to address in order to provide more efficient and effective investment facilitation services. An important component of these workshops will be the prioritization of issues that impede productive activities of investors and overall investment growth; procedural changes required to regulatory and administrative regimes of the key public institutions at provincial level; and, measures that can be used to strengthen relationships between investors, public officials and local communities. The workshops will also seek to systematically address attitudes and delivery capacities of public institutions, local and traditional authorities providing services required by the private sector.

Lumwana Commissioned

Exporter Survey On…… The forecast of the annual Exporter Audit indicates that a lot of export companies will reveal a slight change in the Non Traditional Exports (NTEs) due to the global economic melt-down being experienced by most markets globally. However, a comprehensive analysis can only be arrived at after the data collection exercise is completed by the Export Promotion and Market Development (EPMD) Division of Zambia Development Agency. The survey is aimed at collecting factual information and statistics on production and sales to obtain a realistic assessment of the country’s supply and marketing capabilities and annual performance for all NTEs. NTEs include all products except base metals (Copper and Cobalt). The survey involves identification of problems facing both established and emerging exporters with a view to making appropriate recommendations and measures to relevant stakeholders such as government through Ministry of Commerce Trade and Industry MCTI). Sectors being covered in this audit exercise are 15 sub-sectors, namely; agriculture, animal products, building materials, chemicals and pharmaceuticals, engineering, gemstones, handicrafts and curios, horticulture and floriculture, high value products, leather and leather products, mining, processed foods, textiles and other products.

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Equinox, which had a long term and mutually beneficial view of investment in the country. He also urged Lumwana to consider processing the copper it mined and add value to make copper exports more profitable. And Mr. Williams called on government to continue honouring its obligations towards Lumwana as it could not afford policy delays. He said Lumwana Mine was not yet successful as the shareholders had not yet been paid their return on investment. He praised the fanciers of the investment in Lumwana, shareholders in the mine, employees, the government and the Zambian community for supporting the development of the project. “Equinox has come to build and will continue expanding its investment in Zambia,” Mr. Williams said. He ended his speech with the phrase, “Ladies and gentlemen I give you Lumwana.” President Banda also unveiled a marble and granite statue depicting clasped hands as a symbol of unity. The ceremony was graced by traditional leaders, Equinox directors and Cabinet Ministers.

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Fund for Exporters The Zambia Development Agency (ZDA) is currently working with various producer associations that represent interests of their members in selected sectors to administer the ZDA Export Development Fund (ZEDEF) through a Management Board. The aim of fund is to contribute to the expansion of nontraditional exports via provision of low interest loans. All non-traditional products save for tobacco and tourism, are eligible under the fund. The Fund is administered by a Management Board which comprises the Chairman of ZDA, the ZDA Director General, the ZDA EPMD Director, a representative of the MCTI, a representative of the National Authorising Office (NAO), a representative of the Zambia Business Forum and the ZEDEF fund administrator. The portfolio is expected to reach €5 million. Producer Associations such as the Leather Producers Association, Organic Producers Association, Honey Producers Association, Association of Zambian Women in Mining, Lumber Producers Associations, Timber Producers Association, Agribusiness Forum and Crocodile Farmers Association work with ZDA to administer the fund.

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CHALLENGING THE DOWNTURN The global credit squeeze maybe hitting countries hard with little cash flow for investment but in Zambia recently five Investment Promotion and Protection Agreements (IPPA’s) were signed by the Government with five different enterprises from various sectors signifying that the policies on investment remain attractive. Signing the agreements on behalf of the Zambian Government, Minister of Commerce Trade Industry, Mr. Felix Mutati, said he was very impressed with the level of investment that could easily be the highest in the region despite the credit crunch. He said regardless of what was happening elsewhere in the world it was pleasing to still attract investment valued at over U$ 160 million in just one week. This action he said would create new job opportunities and rebuild the confidence in the efforts of growing the economy in the face of massive job losses in many sectors. The first agreement was signed with Zamanita Limited in the sum of U$27 million to expand and modernize the existing facilities in order to produce edible oils, margarine and animal feeds using cotton seeds, soya beans and sunflowers. Another agreement was signed with Medicare International Limited, for the construction of a U$40 million high tech hospital that would enable government cut down on the U$4 million annual budget spent to send people for treatment abroad. The remaining IPPA’s were signed with ETC Bio Energy Limited, Progressive Poultry Limited and JJ Transport Limited. ETC Bio-diesel would invest U$56 million to establish a vertically integrated biodiesel operation by growing jatropha in Mpongwe on the Copperbelt; Progressive Poultry Limited would establish a modern state of the art broiler breeder farm and hatchery valued at U$18 million while JJ Transport would invest U$16 million to operate a fully fledged modern and efficient transport system with quality assurance techniques that would include satellite tracking. “This is what we need as we continue with the global diversity. The investment made this week confirms government investment environment was competitive both locally and regionally and stability secured over the years,” Mr. Mutati said. He said the transactions in a single week were “a tremendous achievement because the output of the investment would go towards job creation and ownership, bring hope, opportunities and confirm the diversity of growing the economy.” Board Chairman of the Zambia Development Agency, Mr. Luke

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Mbewe, who signed on behalf of the ZDA, said the level of investment received was a sign of confidence that the country had created in both local and foreign investors. He said, “It is evident that Zambia offers an enabling and competitive investment climate for investors and hence the high volume of investment commitments that we have received and many which are under implementation despite the prevailing credit crunch and economic recession worldwide.” In signing the IPPA’s, Government and the ZDA commit themselves to encouraging and promoting the projects and ensure their successful implementation under the auspices of the ZDA Act, No 11 of 2006 and certify that the companies are eligible for tax and duty exemptions.

Market Access For MSMEs….. National and Multi-National companies are partnering with the Zambian Government in a Business Linkage Programme that is designed to create linkages between MSEs and large corporations (MNCs) to increase market access for MSEs via forward and backward linkages. The national programme is being undertaken with the support of the United Nations Centre for Trade and Development (UNCTAD) and the International Labour Organisation (ILO). Tata, Zambia Sugar, Zambia Breweries and Zain are some of the companies that are joining forces with Government to present supplier opportunities to MSEs.

MSE Sector Growing The financial packages and sensitization programmes designed to stimulate Micro and Small Enterprises (MSEs) are beginning to bear fruit with the number of MSEs applying for ZDA Certificates increasing. In April 2009 ZDA approved 27 applications representing realised investment of K1,409 587,950 and K1,474,912,395 planned investment from the service, trading and manufacturing sector. These MSEs currently employ 143 workers and expect to create an additional 118 new job opportunities. “The sector is being recognized as the engine for growth like the Asian Tigers, in the far east, where they developed because of MSEs,” says ZDA MSE Director, Windu Matoka. He notes that it is a requirement for enterprises to formalize their status with PACRO and register with the ZDA to access funds from Citizens Economic Empowerment Commission. The MSE sector contributes to the national treasury in form of taxes, levies and other fees and is increasingly being recognized as a critical sector by banks who are designing special products for them.

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Dr. Mulungushi Tips ZDA…. The Zambia Development Agency has a critical role to play in stimulating the country’s social and economic development by creating real wealth that impacts on the lives of ordinary people, making them access schools, healthcare roads and other facilities. Speaking when he met ZDA Management, the Permanent Secretary in the Ministry of Commerce Trade and Industry, Dr. James Mulungushi, said monitoring activities were important but not the end as the country was looking for wealth creation. “Moving away from parastatal to private is important but without the necessary policy instruments it will never happen. Your role is very critical to create that environment; you have the mandate people are expecting results,” Dr. Mulungushi said.

North South Corridor Gets U$1.2 Developed countries and lending agencies recently agreed to a financing package of $1.2 billion to improve infrastructure in Southern and Central Africa at a two day international investment conference meant to expand transport links and trade. Regional leaders met in Lusaka, to discuss plans and attract funds to boost road links and regional trade. Britain said it would separately provide 100 million pounds ($149.2 million) to transform the region's infrastructure to increase trade and mitigate the effects of the global financial crisis. US$ 600 million will come from the African Development Bank (AfDB), and this will be disbursed over the coming three years, according to its President Donald Kaberuka. The World Bank, through vice-president Obiageli Ezekwesili, promised US$ 340 million for the project over the next 3-4 years. EU Trade Commissioner, Catherine Ashton, pledged 115 million Euro on behalf of the community. Officials said the funds would be used to finance new projects and upgrade existing infrastructure, which include 8,000 km (4,970 miles) of road and to rehabilitate 600 km of rail track linking eastern and Southern African countries. USAID representative at the conference, Franklin Morris, told the conference that his government had always been supportive of African initiatives and that there would be no change in this regard. The cost of doing businesses in the region that spans eight countries: Tanzania, the Democratic Republic of Congo, Zambia, Malawi, Botswana, Zimbabwe, Mozambique and South Africa; is expected to come down.

Zambia Development Agency

Events

P.O Box 30819 Nasser Road Lusaka, Zambia

Meet In Africa Leather Exhibition 4-7 May 2009

Tel: 260-211-220177

Zimbabwe International Trade Fair-Bulawayo 28 April-2 May

Fax: 260-211-225270

Copperbelt Mining Commercial Agriculture Show 27-29 May

E-mail: [email protected] Website: www.zda.org.zm

International Trade Fair/Trade Mission-Malawi June-Aug,2009 Zambia International Trade Fair –Ndola 1-7 July, 2009 International Trade Exhibition– South Africa 19-23 July Big Five - Republic of South Africa July-august 2009 Zambia Agriculture and Commercial Show

Facilitating Economic Growth and Development

July-Aug 2009

Trade Exhibition-Mozambique 1-7 September, 2009 Trade Mission-Democratic Republic of Congo October 2009 Trade Mission/Trade Exhibition-Dubai

Oct-Nov 2009

Plant Expansion On Target….. The Zambia Sugar Plc has met all the benchmarks of the Investment Promotion and Protection Agreement (IPPA) that it signed with the Government and the Zambia Development Agency (ZDA) in March 2007 to undertake a U$185 million expansion project. The expansion programme covered expansion of the existing plant, planting over 10,400 hectares of sugar cane, construction of new roads and about 26 kilometers of canals that would lead to direct employment of more than 5000 employees, with an estimated 257 small holders added to the existing scheme. Speaking when the Minister of Commerce Trade and Industry, Mr. Felix Mutati, visited the plant to check on the implementation of the expansion programme, out-going Managing Director, Mr. Paul Robillard, said implementation of the expansion programme had been tough with many challenges but the support that the Government had rendered to the com-

pany would enable them complete the project works by June this year. Mr. Robillard thanked the Government Technical Team and in particular, the Director of Industry, Mr. Siazongo Siakelenge, who had played a key role in the negotiations and the development of Zambia Sugar PLC. “Your Technical Team is a model and our partnership is good and shows how Government can work with the private sector,” he told the Minister and his delegation that included representatives from Mazabuka district, senior officials from government and ZDA. He said that he was proud that Zambia Sugar had met the parameters and was on target despite price increases in fuel and steel. Mr. Mutati, in recognizing the efforts of the Zambia Sugar Plc, said he was very proud of the company’s commitment and delivery of benchmarks, saying there was no place in Africa where a project of that size had been

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delivered in two years. He said Zambia Sugar had created new job opportunities, increased the out-grower scheme thereby reducing poverty, bringing skills transfer and becoming self sufficient in power generation. Mr. Mutati also thanked Mr. Robillard for delivering “a gift that would deal with tomorrow” and called on the new Managing Director, Steve Langton, to continue with the legacy that Mr. Robillard had left by going forward assuring him of government’s continued support. The expansion programme has been successful because of the favourable climate that is idle for growing sugar, arable soil, good quality of water and proximity to the regional market. Other factors are the regime change in the sugar sector, allowing the company to export any amount of sugar to Europe, growth in the regional market and an enabling environment that has allowed the company to explore biodiesel production.