20 Trade Ministers from Africa will engage with senior officials from
the World Bank, African Development Bank, European Investment Bank,
World Trade Organization, and African Union amongst other financiers
and economic development institutions that focus on Africa.
The expectations in Africa, are that these funding and financing
institutions will pledge over USD2 billion to finance regional
infrastructure projects.
Sub Saharan Africa sees this meeting as an opportunity to secure
investment into roads, railways, bridges, electricity generation, and
telecommunications both at national levels, and at regional levels, to
support enhanced trade and commerce that will directly improve
economic growth and reduce poverty in the developing economies.
This North South Corridor meeting is dubbed as a pilot Aid for Trade
project which is initiated by COMESA, EAC and SADC.
A key component of this initiative is to engage regional and domestic
private sector representatives, in business dialogue and negotiations
that will evolve into viable and implementable projects.
The idea is welcome by the private sector in Zambia, but could be
expanded to include financiers from Japan, China, and India where
funding and technology is easier to access, and offers wider options
to the Sub Saharan countries in respect to development partners.
As the world navigates through the current economic recession, many
challenges face our economies in Southern Africa, which include
runaway foreign exchange rates, unsecured domestic insurance cover,
shrinking markets, high production costs, low commodity prices, and
widespread job losses.
The expectations that a hand full of traditional development partners
will turn our economies around may be too wishful. We may need to
re-model our economies to engage with the developed world such that we
become more attractive for infrastructure development financing than
we have been in the past.
To this end, strategies for opening up new opportunities in various
economic sectors such as timber processing, marble production,
industrial minerals mining, new tourism options, manufacturing, copper
value addition, and agro processing may have to be considered and
developed to make a good case for Zambia.
Recently the media reported that some new investment in the timer
sector was being carried out on the Copperbelt. This information
enhances Zambia’s profile to attract investment in infrastructure. The
announcements that the timber will be processed and used to produce
finished products within the Copperbelt further exhibits enhanced
local capacity to export and makes a compelling case for the need for
infrastructure development at both domestic and regional levels.
Zambia is undermined when reports are made that Insurance companies
should be cautious when underwriting bank loans to the private sector
due to the high rates of defaulters. There is definitely a case for
businesses in general to be more cautious this year than any other
previous years because of the fragile global economy, but there is
still a strong case for businesses to grow, diversify and create
wealth and jobs. This should be our message to the outside world if we
are to attract investment into our economy. We cannot expect outsiders
to invest in our country if we ourselves show reservations in the
performance of our economy purely because we are not planning the
future.
Some realities must be taken into account in respect to private sector
development and economic activity in Zambia. The indications that
foreign exchange based contracts should be converted into local
currency contracts are easier said than done. A currency conversion
from a stable currency to a floating one such as the Kwacha, generally
attracts pre-emptive devaluation through exchange rate hedging. This
practice is not welcome in an economy where we are trying to keep the
Kwacha stable and not too weak against other foreign currencies, so as
to maintain a working balance between the cost of imports and the
income from exports.
Currently Zambia’s infrastructure needs are fairly plain to see. At
the top of the list is to build several more hydro electric power
stations on our major rivers and waterfalls across the country. This
requirement will not only address the current electricity deficit, but
ensure that we have adequate electricity to service the demands of the
new industries and mining operations already in the development
pipeline for at least the next ten years. Zambia’s railway network
comes a close second with the need to rehabilitate the current line
between Livingstone and Chililabombwe. In addition, links to
Kasungula, Katima Mulilo, Chirundu, Chipata and Solwezi would greatly
enhance the movement of goods and passengers across the country to the
various border posts with our neighbours. Third in line would be the
development of the coal mining opportunities in Maamba and other sites
to substitute imported oil based fuels for our growing industries in
the mining sector and manufacturing sector. Fourth would be to upgrade
landing strips and airports in some places, and build new airports in
other places where the impact on the attraction of new tourism would
be greatest. Such sites are Mansa, Kasaba Bay, Kafue National Park,
and Siavonga. Fifth but not necessarily last, would be to build
strategic bridges across the rivers that are at busy border crossings
and those rivers that annex the country in such a way that development
and resources may be prevented from reaching Zambian communities.
Zambia has taken a deep breath in the past, and had great expectations
from such initiatives as the COMESA FTA, the SADC FTA, AGOA, and the
EU Cottonou Agreement. Not much success was registered from these
initiatives, mainly due to the fact that we did not strategize how we
were going to take advantage of the initiatives, and what we were
going to invest in the strategies to ensure that Zambia benefited for
the exercise.
Great expectations will only be realized, if and when, we invest our
time and resources in developing a strategy and investment program,
that will ensure the desired results will be achieved.
Published 24 March 2009
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