Investment Promotion

The price of copper is slowly edging upwards and the effects of the global crisis are pressurizing all economies of the world.

It therefore comes as a welcome lifeline when the media reports that the Chambishi Multi-facility Economic Zone on the Copperbelt has received investment commitments of over USD683 million.

The struggle that we continue to face in this endeavour is that of publicizing what is going on, and engaging with the businesses on the ground.

It takes curious Members of Parliament to ask questions about our Economic Zones so that some information can be released to the public. One would expect that investment information would be freely shared with the public in an effort to stimulate both foreign direct investment inflows as well as to promote domestic investment opportunities.

The ten companies listed for investment in the Chambishi Zone will focus on construction, copper mining, steel, mechanical components manufacturing, blistering, and acid manufacturing. Many of these sectors are currently operational around the mining industry, and no mention of value addition to copper was made. Zambia may be smarter to promote the value addition agenda so that much of the copper export earnings capacity can be realized out there on the Copperbelt. Let’s look at copper cable manufacturing as ZAMEFA is doing. Let’s consider copper sheet production. Let’s focus on copper piping production. These are but a few items that Zambia can produce out of copper and export into the region.

The issue of Zambian investors partnering with Chinese investors will not be realized by simple announcements. There is need to strategically engage Zambian businesses with Chinese companies through broader forums preferably held in Zambia, to encourage local investors to dialogue with as many possible partners from China. This task requires commitment and should target the greater majority of Zambians to establish greater domestic equity in the country’s economic development agenda.

Our past experiences have taught us that pledges are not equal to investments. Foreign investors may pledge huge amounts when the negotiations are exciting. It is only when the money is in the country that we can safely count on those pledges to work in our local economy. Partnerships between Zambian companies and any foreign investors becomes a useful mechanism to keep the negotiations ongoing, keep the project exciting, and for the local partner to keep the dialogue going to ensure that the investment pledges convert into real investments on the ground.

The Tanzania Zambia Railway Authority (TAZARA) reports that it has invested more than USD60,000 in rail track maintenance along the 2000 kilometres of rail line. The cash invested is a good development, but is only a drop in the ocean towards addressing the operational needs of TAZARA.

Although the rehabilitation work expects to increase the cargo volume of TAZARA four fold, other logistics such as the state of the wagons and locomotives will work against better performance of the company.

TAZARA seeks to collaborate with Railway Systems of Zambia (RSZ) so that cargo can be distributed across Zambia and conveyed over the Copperbelt into the Democratic Republic of Congo (DRC). This program will require RSZ to also invest in the rehabilitation and upgrading its own rail lines to cater for the demand coming from TAZARA.

It is quite evident that both TAZARA and RSZ need huge cash injections into their individual networks. Much as it is a positive development that these two companies will work together, there is an opportunity for both companies to look around for new investment.

Zambia will soon be an operational part of the COMESA Customs Union and the domestic railway network should be a strategic part of our regional integration program. Zambia can position herself to be a hub for cargo movement in the sub region and realize good revenues from this service.

The opportunity requires that both TAZARA and RSZ move much faster in becoming reliable and cost effective cargo movers. In addition, the road and telecommunication networks are expected to support sub regional cargo movement so that the transit time from source to destination is kept to a minimum.

There is definitely good opportunities for new investment in the railways sector that should be marketed around the world, and possibly more specifically, to the ongoing Chinese investment exercise targeted on the Economic Zones.

Nitrogen Chemicals of Zambia (NCZ) appears to be the sleeping giant that has decided to come to life and support the agriculture sector once again.

NCZ is looking to produce D Compound fertilizer in August and solicit for K 5 billion to finance its rehabilitation works at the fertilizer manufacturing plant.

In essence NCZ will produce as much fertilizer as Government will finance. This suggests that technically, Government will provide the working capital to the company for any products that the Government requires.

Over the last few years NCZ has produced Basal dressing fertilizer while other importers of fertilizer have supported the agriculture sector through imports of D Compound and other requirements. The situation will hopefully change as NCZ takes on more responsibility for producing the range of requirements for the agriculture sector.

NCZ needs to develop some mid term and long term strategy for seeking investment into its fertilizer producing plant to cater for the needs of Zambian farmers and possibly to export to the sub region.

An encouraging development at NCZ is the program to rehabilitate the Ammonium Nitrate processing plant which has the potential to produce various inputs for mining processing. Some strategic partnerships have been formed between NCZ and three private investors which include African Explosives limited in an effort to pool resources and get NCZ on its feet and sustainably productive once again.

NCZ is a state enterprise and is therefore publicly owned by the people of Zambia. It will therefore be prudent to share with the public, the details of any new investors wanting to engage with NCZ and the nature of the partnerships.

Public opinion generally appears to interfere with ongoing negotiations, but it also the mechanism that ensures that the negotiators on behalf of the Government are committed to getting the best deal for the country, and in the best interests of the country.

Investment promotion is not only about advertising and publicity. Investment promotion is about strategy, long term implications, and as in the case of Zambia, investment promotion also encompasses issues of the greater public good.

Published 21 July 2009