Zda Spotlight Issue 5

Zda Spotlight Issue 5

Zambia Development Agency

July 31 2009

Inside this issue:

Chinese Firm to Invest US$3.63 Billion

Russia Determined to Boost Trade with Africa

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2009 First Half Records US$755M Investment

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MSE Clinches MultiDollar Project

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SA Firms Seeking Agents at ZACS

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ZDA Attends Dar-essalaam Fair

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MSEs Get Market & Finance Access Training

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Implications of Current Financial Crisis

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Points of Interest • “FDI is becoming very competitive, hence the need to be innovative to keep its inflow at par.” • “Wealthier nations have the obligation to assist Africa create joint institutions and companies that rest on mutual economic benefits rather than giving the continent primitive aid which disadvantage Africa’s development ” • There is a steady come back of investor confidence in the economy after the credit crunch.

Quote “The investor of today does not benefit from yesterday’s growth” Warren Buffet

Mining Group leading to its signing within a few months. Speaking at the same occasion, ZDA Chairperson, Mr. Luke Mbewe, said foreign direct investment was becoming very competitive, hence the need to be more innovative to keep its inflow at par. Mr. Mbewe assured Zhonghui Mining Group that its investment would be well protected under the laws of Zambia. MSEs earn a living through making simple wares . In picture, MSEs making pop corn machines. ZDA facilitates the growth of MSEs in the country to enhance wealth creation. ( Story below) Government, Zambia Development Agency and Zhonghui Mining Group Limited of China have signed a US$3.6 billion Investment Promotion and Protection Agreement (IPPA) to guarantee the Group’s investments in the mining and related sectors.

Mr. Felix Mutati said the investment Zhonghui Mining Group was bringing to Zambia was the biggest single investment in the region. Mr. Mutati said the investment would translate into more than 32,000 direct job opportunities and an additional 2000 jobs in related industries. The minister has since commended ZDA for working hard to conclude the IPPA negotiations with Zhonghui

Speaking during the signing of the IPPA, Minister of Commerce, Trade and Industry,

And Chinese Ambassador to Zambia, Li Qiangmin, commended ZDA for its courage to attract huge investment in the country . “ZDA, you are very courageous. It is not easy to bring such a huge investment into the economy from a single entity at once,” said Mr. Qiangmin. Meanwhile, Zhonghui Mining Group Chairperson, Yaohui Wang, said the signing of the IPPA gave (Continued on page 2)

30 MSEs Registered with ZDA ZDA approved thirty Small and Medium Enterprise applications for MSE certificates in June, with a total investment of K2.1 billion.

ers were from ventures situated in North-Western and Copperbelt provinces. The K2, 108,142,542 total investment is expected to create 170 job opportunities in the economy.

The approved investment applications were from enterprises located in Lusaka, Central, Southern, Western, and Luapula provinces. Oth-

These applications were from the manufacturing, agriculture, trading, service,

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and construction sectors, with the service sector recording the largest investment of about K791.6 million while the manufacturing sector recorded about K616.2 million. Other sectors contributed about K70 million to the MSE investment certificate application approvals.

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Russia Determined to Boost Trade with Africa- Envoy Russian Ambassador to Zambia, Boris Malakhov, has urged African countries to create effective financial instruments that promote self-development to withstand economic upheavals. And Mr. Malakhov has charged that wealthier countries had the obligation to assist African countries develop joint venture institutions and companies that rest on mutual economic benefit rather than giving primitive aid to the continent that consequently disadvantaged economic growth and development of African economies. Speaking at a Business Forum organised by the Zambia Development Agency at the just ended Zambia International Trade Fair in Ndola, Mr. Malakhov said Russia’s approach to Africa is to assist the continent to unlock its potential to boost its trade and economic stamina in the world. “What we want is to assist African countries to the extent of unlocking their own possibilities. Russia is looking for such ways and means of mutually beneficial cooperation and providing assistance, which by all means cannot be called dead aid,” Mr. Malakhov said. He said although the global financial and economic crisis had substantially undermined world economic stability and affected every country, further strengthening of friendly relations with the African states and promoting multifaceted cooperation remained the highest priority of Russia’s foreign policy. Mr. Malakhov said Russia’s trade policy paid less attention to African and Latin American continents in the 1990s, a situation the country has revisited. “Russia’s change of approach towards Africa can be shown by the recent visit of the Russian Federation President, Mr. Dmitry Medvedev, to Egypt, Namibia, Nigeria and Angola. The visits were meant to give boost to our trade and economic turnovers with Africa, which currently stands at US8.2 billion Dollars,” he said. And Mr. Malakhov has said there was need for cooperating partners to sign intergovernmental agreements to encourage and protect investments that faced difficulties in kick-starting due to legal complications. Mr. Malakhov has since commended the Zambian Government for facilitating the exchange of economic information to appropriate institutions that helped in organising

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business forums and presentations to enhance mutual understanding among partners.

Chinese Firms US$3.6bn

“Russia and Zambia have good experience of cooperation in many spheres. This facilitated our investment in Zambian soil. For example, through Zambia’s cooperation in economic and investment information exchange, several Russian investors have shown interest to invest in Zambia based on business proposals prepared by the Russian-Zambia Business Council in September 2008 ,” Mr. Malakhov said.

From page 1

The Ambassador said the Russian Embassy was ready to broker the establishment of business relations with Russian partners. He said potential areas of cooperation could be in energy projects, mining industry, oil and gas, tourism and agricultural cooperation.

2009 First US$755.3m

Half

Injects

ZDA has recorded more than US$ 755.3 million planned investment in the first and second quarter of 2009. And the Agency has recorded a tremendous rise of investment in the second quarter compared to the first quarter of the year by more than US$ 357.7 million. ZDA Senior Investment Promotion Officer, Roy Kapembwa, attributed the increase to the steady coming back of investor confidence in the economy from the credit crunch. “The confidence of investors is steadily coming back after serious investment decrease experienced recently due to the uncertainties that were caused by the credit crunch,” Mr. Kapembwa said. The real estate sector contributed the largest amount of pledged investment of more than US$208.2 million, due to the high demand for modern office spaces by the market . The recorded investment pledges during the period under review were US$198, 777, 750 and US$556, 510,450 in the first and second quarter respectively.

ZDA at the ZACS Zambian Development Agency (ZDA) will be explaining how it facilitates growth for Medium and Small Enterprises (MSEs) at the 83rd Zambia Agriculture and Commercial Show slated for 30th July-3rd August 2009. ZDA will use the ZACS to promote the vast investment opportunities of Zambia to investors and entrepreneurs locally and abroad. This years’ theme is: “Challenge of Change,” a theme that tallies with ZDA’s mandate of facilitating growth of the MSE sector.

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to

Invest

confidence for the Group to invest in the Zambian economy. “The IPPA is a guarantee that we can entrust our money into the Zambian economy and very soon both parties will see good results. We hope to flourish with our Zambian brothers and sisters,” Mr. Wang said. Mr. Mutati signed on behalf of the Government, Zhonghui Mining Group Limited Chairman Yaohui Wang for the Group and ZDA Board Chairperson, Luke Mbewe, for the Agency. The Zhonghui Mining Group Limited project involves the mineral explorations works, mining, concentrator works, smelting, marketing and selling the copper on the domestic and international markets. An initial US$3.633 billion has been earmarked for the project during the first 5 years. The investment project will be implemented by the Group through its subsidiary companies namely, Zhonghui Mining Industry Zambia Limited, which was incorporated on 19 July 2007, Golden Lion Mining Industry Zambia Limited, incorporated on 6 May 2008, and Wang Wang Holdings Zambia Ltd.

MSE Clinches Multi-Dollar Project A Small and Medium Enterprise has partnered with Lumwana Mines and Marli Investment (Z) Limited to undertake Jatropha Curcas Linn seedling farming and supply the Linn-seedlings to Lumwana Mines. Zam-Vizwear (Z) Limited is undertaking the project under the out-grower scheme initiative with Marli Investment Zambia. In this vain, Zam-Vizwear acquired a 10 hectare land for the project at an estimated total investment of US$38,000. The US$38,000 covered expenses for land acquisition and preparation, creation of a water reservoir, designing and laying out the irrigation system, purchase of Jatropha seeds, water pumps and horse power engines for irrigation. To kick-start the project, Zam-Vizwear purchased 10×25kg bags of Jatropha Curcas Linn seeds from Marli Investments (Z) Limited with each bag containing 40,000 seeds at a total cost of US$5,454. Upon satisfactory production of the seedlings in accordance with the terms of reference and specifications, Marli

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Investment (Z) Limited bought the entire Jatropha seedlings off the nursery on behalf of Lumwana Mines at US$290,909.09. Following the country’s projected land use of 2,000,000 hectares for bio-fuels the market value for the seedlings is projected to rise by 20% as most farmers were closely following up the biofuels in the agro-sector The Jatropha project is Zam-Vizwear’s diversification strategy from its initial business of supplying industrial safety requirements, protective clothing and reflective materials to the Zambian business community and the surrounding Sub-Saharan African countries. The major clients of Zam-Vizwear have been the mines, but due to poor performance of the sector, the company experienced poor cash flow hence opting to venture into agro-related business to cushion the impact of the losses caused by the mining sector’s poor performance.

South African Firms Seek Distributors, Agents at ZACS Six South African companies under the South African International Business Linkages (SAIBL) have confirmed participation at this year’s Zambia Agriculture and Commercial Show. These companies include Fred Footwear, ShineOn Polish cc, Zhauns Group, Powa Brands cc, The Smart Food Company, and Makhaya Bushmen Ceramics. The companies manufacture a number of products among them small-medium machinery for food processing and diaper manufacturing, ceramic products like tiles and bathroom assortments, nutritional food (instant porridges, vitamin and fortified foods), school and formal leather footwear among others. The companies are looking for agents, buyers and potential distributors of their products as a way of broadening the market for their products in the region. Those who wish to wish to get more information on any of these companies can contact their Trade Representative, Patrick Chilombo on 0955 600 010 or [email protected].

ZDA Attends Dar-es-Salaam Fair The Zambian stand at this year’s Dar-esSalaam International Fair, which took place from 28th June to 9th July 2009, attracted many visitors with chain stores placing huge order for Zambian products.

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Zambia Development Agency (ZDA) coordinated the participation of six Zambian companies in the 12 metre stand, which was visited by Tanzanian President, Jakaya Kikwete. Mr. Kikwete was impressed with the products on display and walked away with product samples comprising assorted fruit juices from California Beverages, pharmaceutical baby care products from Pharmanova Zambia Limited, leather shoes from Malar Industries Limited, baked Beans and Peanut Butter from Fresh Pikt. Including some assorted garments and textile products from African Joy and product information brochures. Many visitors to the stand wanted to obtain first hand information about the products being exhibited, the manufacturers, the quality of samples and how they could make orders.

MSEs Get Finance and Market Access Training Zambia Development Agency (ZDA) and partners have rolled-out a training programme for Micro, Small and Medium Enterprises in all provinces on access to finance and markets. The training programme which is being undertaken by ZDA’s Micro and Small Enterprise (MSE) Division and seven relevant institutions is funded by the Private Sector Development Programme (PSDP) at a cost of K561 million. Institutions involved in the programme include Citizen Economic Empowerment Commission, to explain its role in supporting MSEs; Patents and Company Registration Office, to highlight the registration procedures and requirements; Zambia Public Procurement Authority, for tender tips and how MSEs can tender. Other partners are the Zambia Revenue Authority on tax matters, banks for guidance on financial discipline, a Transnational Corporation to explain on business linkages with MSEs, and Zambia Development Agency to give entrepreneurial tips on bankable business plans. Zambia Development Agency Medium and Small Enterprise Division Director, Windu Matoka said the programme will run for five weeks. Mr. Matoka said the training programme which started in Solwezi in North Western province and Mazabuka in Southern province this month, will be concluded in September 2009. He said after this training, the team will go back to the provinces to have one-on-one discussions with MSEs on challenges they encountered in conducting business in their localities.

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ZDA Records More Than US$100M Investment Rise Last month’s planned investment inflow has increased by US$109.7 million compared to May, an indication that the country has remained an attractive investment destination despite the credit crunch. More than US$281.4 million planned investment was approved last month, compared to US$171.7 million that was approved in May 2009. The approved investment licence applications were from thirty-two applicants, with a total of 3, 614 new job opportunities expected to be created once implemented. These planned investments were in the manufacturing, real estate, services, tourism, agriculture, transport and construction sectors. Other sectors were health, financial and education sectors. The real estate sector attracted the largest planned investment of about US$200.6 million, while the manufacturing sector with US$22.8 million. Other sectors shared the total of more than US$58 million of the approved investment licences.

Uganda Hosts Smart Partnership Dialogue The 19th Global Smart Partnership Dialogue was held in Kampala, Uganda with a strong call for public-private partnership towards improving social-economic transformation for impoverished nations. Speaking at the opening ceremony, President Yoweri Museveni of Uganda described the Smart Partnership dialogue as a win-win situation that could spearhead the transformation of African societies. Mr. Museveni pointed out that the development human resource, a network of good roads and railway lines, adequate and cheap electricity as well as the private sector and regional integration are critical pillars needed to accelerate socio-economic transformation of societies in Africa. Mr. Museveni argued that the Smart Partnership Movement was a unique meeting that brought together people of different cultural, political and economic backgrounds to discuss global issues with the aim of finding solutions to the common problems. The three-day conference attracted over 1,000 delegates and at least half of the 10 heads of government invited. President Rupiah Banda was among those who attended the conference.

Zambia Development Agency

SELECTED ECONOMIC INDICATORS

P.O Box 30819

JUNE 2008

JUNE 2009

Nasser Road

1. Inflation rate (%)

12.1

14.4

Lusaka, Zambia

2. Average Treasury bills rate (%)

12.1

13.9

3. GRZ Bond Yield Rate: (24-month) (%)

14.7

18.9

4. Average Lending Rate (%)

24.4

27.0

US$

3,186

5369

EURO

5,092

7,181

BPS

6352

8024

RSA

407

627

Maize

N/A

318

Wheat

N/A

385

Soya beans

N/A

380

821

564

Tel: 260-211-220177

5. Exchange Rates: (ZMK/foreign currency)

Fax: 260-211-225270 E-mail: [email protected] Website: www.zda.org.zm

6. Agriculture Commodity Prices: (US$/MT)

7. Capital Market Activity Equity trading: Number of Trades Volume of Trade

134,932,568

165,065,335

Turnover (US$)

33,710,080

3,975,596

Foreign Portfolio Investment: (US$)

Facilitating Economic Growth and Development

Inflows (Buying) (US$)

16,690,437

811,095

Outflows (Selling) (US$)

(10,195,523)

(1,723,220)

6,494,914

(912,125)

Net Position (US$)

Sources: Bank of Zambia, C.S.O., Luse, Zamace

Zambia Development Agency ZDA At COMESA Customs Union Launch

Implications of Current Financial Crisis

under theand current global financial Tourism Investment Promocrisis is local investment. tion

ZDA was part of the Zambian delegation that attended the 13th COMESA Head of States and Governments Summit whose deliberations culminated in a number of agreements including the launch of the COMESA Customs Union. The COMESA Customs Union was launched with a Common External Tariff (CET) of four tariff bands. These bands are 0% for raw materials, 0% for capital items, 10% for intermediate goods and 25% for finished goods. The aim of the Customs Union aims is to create more trade links within the COMESA region which will stimulate intra- COMESA trade diversification. The Customs Union’s interim period will cover three years for tariff alignment, plus an extension of five years. Zambia is expected to realise tremendous benefits from the Customs Union, including increased Foreign Direct Investment flows, export diversification and a stronger negotiation position in multilateral negotiations.

Africa is affected by the financial crisis in many ways including reduced trade, financial growth, reduced remittances and stagnating official development assistance. This observation was made at the Expert Group Meeting on Industrial Investment Policies held in Addis Ababa, Ethiopia. The meeting sought to address the challenges hampering African industrialisation. It was further observed that foreign direct investment is falling rapidly than global investment. From empirical evidence, FDI has not been a key driver of investment in Africa. As a proportion of GDP, FDI in Africa it accounts for about 5%. The key to growth under the current condition is ability of the economy to adapt to new changes. There was also need for Africa to highlight the fact that profitability in manufacturing is higher at 20% than in developed economies and the major driver of investment under the current global financial crisis is local investment.

The Ministry of Tourism, Environment and Natural Resources and other relevant institutions between 13th and 17th July 2009 undertook a trip to identify tourism sites on the Northern Tourist Circuit and other areas to boost the tourism and investment promotion drive. The exercise was meant to capture photographs and video footage of the identified sites to promote and show existing infrastructure including available resources in the areas to entice investors and tourists. The team comprised the Ministry of Tourism, Environment and Natural Resources, Zambia Wild Life Authority, Zambia National Tourism Board, Zambia Development Agency, National Housing Authority and Zambia National Broadcasting Corporation and provincial and district administration officials in the identified areas. Areas earmarked for the exercise include Livingstone ,four sites in the MusiO-Tunya National park and two sites uphill of Mukuni Village; Kafue National Park, two sites along Itzhi-Tezhi dam and two inland sites in the park; and Kasaba Bay with four sites along Lake Tanganyika.

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