Hon Sichinga on Zambia’s economic performance

Robert K Sichinga is the Minister of Commerce, Trade & Industry of Zambia. He spoke with The Prospect Group about Zambia’s economic performance, challenges related to agricultural investment, and the overall investment climate in Zambia.

How would you describe Zambia’s economic performance over the last two to three years?

SICHINGA: Normally, the growth of an economy is measured in terms of GDP growth. It looks at issues of exports, issues of inflation, and issues  of interest levels. These are economic fundamentals. Over the last five years, Zambia has consistently shown that it has been achieving growth rates of about 5%. In 2008 our growth rate was at 6.1%. In 2010, this had gone up to 6.4%. As of last year, 2011, this figure had grown to 7.1%. We are projecting for 2012, to achieve 8% GDP growth. Against this background, there is also the issue of inflation. In the beginning of 2009, our inflation was at 18.1%. This was contained by large measure in 2009, and by the end of 2009 this had dropped quite considerably to 9.9%, so we went into single digit inflation. Since then, it has continued to drop, with the latest figure for the end of 2011, showing a further downward trend on inflation to around 6.4%. As we hold this conference, it’s 6.2%. If you look at the economic fundamentals, we seem to have gotten it right. Interest levels were very high. The best rates were determined by the individual banks, and it varied between 18% and 27%. What the Central Bank has done now, is the Bank of Zambia has to give a reference number which has been put down by9%. So with this, we have aligned the levels of inflation and GDP growth. Hence, in terms of performance, I think Zambia has done quite well.

Our total exports have averaged around $8bn. Of which, the bulk is coming from the sale of copper. There has been a boom of commodity prices, in particular, metal prices, and this has obviously benefitted Zambia, even with the fluctuations that have taken place. With exports of $8bn, on average, $7bn of that has come from the metal prices, mostly copper and cobalt. These proceeds have been complimented by agriculture exports which we are calling non-traditional exports. These have come to about $1bn. These are figures that have shown a very positive position. 2011 was a difficult year for us because we had elections, so the investment side has sort of slowed down. In general for investments, if you go back in the last five years, we had a figure of just under $1bn in 2008. Then in 2009, the figure shot up to $1bn. In 2011, we had pledges of investment of $5.4bn. Our target for 2012 is to do about $5bn, as well. There is an interest in terms of exploration work of metals in our country. There is cobalt, copper, and also nickel. There are also other metals and semi-precious stones that have been discovered. Also, there is oil exploration that is going on at the moment. We have been advised that they have found shale oil and since we border with Angola this might be an indication of the same oil bed. We are hoping that this will lead to further expenditure and contribute towards the GDP.

Our target is that, since we have a very young population, we need to develop industries that are sustainable over a long time. Metals are exhaustible. They will come to an end and as will oil deposits. We are looking to increase our investment in renewables, specifically agriculture and the timber industry. We have huge tracks of land which have not been utilized. We have 754,000 square kilometers of land, most of it sufficiently fertile which needs to be exploited. We are hoping that we can do not only agriculture but … READ MORE on http://www.theprospectgroup.com/robert-k-sichinga-minister-of-commerce-trade-industry-zambia-8853/

What issues specific to agricultural investment is Zambia currently facing? How are you working to overcome these issues?

SICHINGA: Clearly it is a major issue in terms of investment. Land has always been a contentious issue; wars have been fought over land. We recognize that if a resource is not utilized, it is not worth anything to a nation. Zambia’s 754,000 square kilometers is only useful if it is exploited in various ways However, because of sensitivities about land, the law that we have at the moment is that a foreign individual may not own land. All of us lease land from the state. However, if a foreign company comes to Zambia and wants land, as a company not as individuals, they can lease land like the rest of us. In this case we have demarcated specific areas which we are calling farming blocks. These farming blocks will not be in just one place but in all the provinces. We have ten provinces in our country and below the province are the districts. In total, we have about 75 districts, and we are creating more in order to bring services closer to the people. Each one of the ten provinces is going to have a farming block and that farming block is then demarcated for investment. We bring in power, we bring in water, and we bring in infrastructure in terms of roads and bridges. This enables those that want to invest to come into these localities. They can lease for fourteen years or they can lease for ninety nine years. It all depends on the kind of application, and this allows the government to have the benefit of reviewing how well people are utilizing the land rather than speculating with the land. The government has insisted that we must reduce the duration of these land leases according to what the paper says it is required. In most cases, when we do a PPP (Private and Public Partnership) we look at the objective. If the investor seeks to recover their money, for example after ten years, then you can give them a fifteen year lease. If they are to recover it in twenty years, according to the agreement they have with the government, then we can give them a twenty year lease or a twenty five year lease. This is how the government has dealt with it. Individuals may not buy land. Even I, as a national, I cannot … READ MORE on http://www.theprospectgroup.com/robert-k-sichinga-minister-of-commerce-trade-industry-zambia-8853/

We are an integral part of the Southern African development grouping. We are also members of COMESA, the Common Market for Eastern and Southern Africa. COMESA, together with SADC and East Africa, is forming a tripartite. We are working towards creating a common market from Cape Town right through to Cairo. That area, comprising 26 countries, is going to be a common market.

How would you describe the climate for business in Zambia?

SICHINGA: I would like to assure investors that Zambia is ready to do business. This is a country that is dynamic. We are on the move. Zambia is experiencing a renaissance, and we do not seek investment from just one source. We will accept investment from the North, as we have traditionally done from European countries. We are also going to accept from the South, such as our neighbor South Africa. We are also looking for investment opportunities in the Middle East. In Dubai, Doha, Saudi Arabia, and Qatar, we are seeking to attract investment from the Arab world too. This is very important for us. Besides that, we are going to Asia. We are going to India, Malaysia, China, Japan, and Korea. In June we are headed to the United States, Canada, and Brazil. We are hoping we can attract investment depending on the strength of the particular countries to which we go in terms of their investment expectations. Zambia is doing this deliberately. We do not want to rely on one country or one commodity. We want to spread the investment. All the partners that come to our country are going to be treated on the same basis. We are increasing the efficiency of our investment institution and the Zambia Development Agency. We are opening up, locally, offices in all … READ MORE on http://www.theprospectgroup.com/robert-k-sichinga-minister-of-commerce-trade-industry-zambia-8853/