Zambia Investor Briefing January 2023
ZAMBIA INVESTOR BRIEFING
January 2023
OVERVIEW
US Treasury Secretary Janet Yellen visited Zambia as part of a three-country visit to Africa. She reiterated the importance of restructuring the country’s debt, something she remained optimistic about following talks with the Chinese in Zurich the week before. Yellen further encouraged President Hichilema to continue the fight against corruption. “I would say the work isn’t done, but there clearly has been an important focus on it”, she said. Talks also touched on food and health security.
State House played host to the International Monetary Fund (IMF)’s Managing Director, Kristalina Georgieva, who met with President Hichilema, Finance Minister Situmbeko Musokotwane and central bank governor Denny Kalyalya, amongst others. The visit centred on debt restructuring, with both sides urging the country’s creditors to ensure an agreement is in place as soon as possible. Georgieva praised the New Dawn government’s efforts “to improve the use of public resources” and “tackle corruption” which, she said, would “create a better environment for investors and businesses”.
A Zambian government delegation, headed by the President, attended Abu Dhabi Sustainability Week, an antecedent to COP28, which will be hosted in the Emirati capital between November and December 2023. The summit yielded a number of agreements, including a Memorandum of Understanding (MoU) and Joint Development Agreement (JDA), signed with the UAE, aimed at facilitating renewable energy investment. Zambia’s state-backed energy company, ZESCO, will form a joint venture with MASDAR, a UAE-government owned renewable energy company, that will develop and deploy solar projects that are estimated to generate an additional 2000 megawatts of energy.
President Hilchilema attended the ‘Dakar 2 Feed Africa: Food Sovereignty and Resilience’ summit in Senegal. Held in collaboration with the African Development Bank and the International Fund for Agricultural Research, the summit convened heads of state from across the continent to mobilise and align government resources, development partners and private sector financing to “unleash Africa’s food production potential”.
Angolan President Joāo Lourenço welcomed President Hichilema for a three-day state visit to discuss trade, investment, energy and infrastructure. In addition to signing an MoU, the two countries agreed to resume direct flights between Lusaka and Luanda. The President also addressed Angola’s National Assembly on the importance of good governance and democracy.
Debt Management
Visits from both the IMF’s Managing Director and US Treasury Secretary this month highlighted the support the Zambian government enjoys from both the international and multilateral communities on to the question of debt restructuring.
Both the IMF’s Georgieva and the US’s Yellen urged creditors to quickly resolve negotiations that have until now, according to Zambian Finance Minister Musokotwane, moved too slowly with a still uncertain outcome. Yellen singled out China as being a “barrier” to ending the debt crisis.
Without restructuring Zambia cannot access a USD 1.3 billion bailout form the IMF, which would give a much-needed boost to the economy. It is hoped that the two high-profile visits will bring renewed attention to the issue of debt management.
Foreign Direct Investment
The Zambian Development Agency (ZDA) registered a more than 150% increase in the number of investment ventures in 2022 compared with 2021. Last year saw 351 registered ventures, yielding an investment of USD 8.59 billion, compared with 255 the previous year, an increase of close to 158%.
According to Albert Halwampa, the ZDA’s acting director general, this translates to just under 75,000 new jobs in critical sectors such as manufacturing, energy, mining, transport, construction and agriculture.
A ZDA report indicted that the country’s improved macroeconomic environment was underpinned by an increase in investor confidence, “triggered by sound economic policies by the government including stabilisation of the macroeconomic fundamentals, implementation of fiscal measures and reaching the IMF Staff Level Agreement on an extended credit facility arrangement with Zambia”.
Agricultural and Mining Developments
Following the December announcement from KoBold, a consortium backed by tech giants Jeff Bezos, Bill Gates and Richard Branson, stating that they will invest in Zambia’s mines, the country’s agriculture sector is too enjoying an economic boon.
Munkotachi, an SME based in the Chongwe district of Lusaka province, has received certification from GlobalG.A.P. - a European retailers standard for good agricultural practices - which will allow its avocados and avocado oils to be sold in the European Union.
Managing Director Christopher Lesa has also said that that the company hopes to expand its poultry farming operation, with the aim of developing more than 90 cooperatives, each with at least 20 members. “The government is trying to support SMEs in so many ways”, he said, “so that people out there can benefit and improve their lives”.
Munkotachi is hoping to plant two million avocado trees on 5,000 hectares across four regions of Zambia, and expects to employ more than 30,000 small-scale farmers.
Load Shedding
The government-backed energy provider, ZESCO, has extended electricity rationing to mining companies following a drop off in water levels at Lake Kariba. According to the Zambezi Water Authority, which manages the lake’s dam, water levels were down to 1.66% of usable storage for both the Kariba North Bank Power Station and the Kariba South Bank Power Station, found on the Zimbabwean side of the lake.
ZESCO had already been forced to reduce electricity flows to domestic customers as the low water levels threatened power generation.
The utility’s chairman, Vickson Ncube, has said that power rationing was expected to be reduced by the middle of next month as water levels recovered. Full generation is likely to resume in March.
LATEST TRENDS
GDP
Inflation
Currency
1 USD = 19.05 ZMW 30 day average = 18.484 Volatility (last 30 days) = 0.48%
OTHER NEWS
Zambia: Abolition of the death penalty ‘a historic milestone’, 06.01.23, United Nations
Climate change action could set off a copper mining boom: How Zambia can make the most of it, 08.01.23, The Conversation
Zambia, UAE to develop $2 billion solar projects, 17.01.23, Reuters
Zambia joins Ghana in its quest to restructure its debt under the G20 Common Framework, 23.01.23, Business Insider Africa
Janet Yellen pushes China on debt relief for Zambia, 23.01.23, The Wall Street Journal
Yellen visits Zambian farm to showcase Africa’s ag potential, 26.01.23, Associated Press
Zesco seeks liquidation of Zambia Electrometer Ltd over unpaid debt, 30.01.23, Diggers
UPCOMING EVENTS
06.02.23 - 09.02.23
Cape Town, SA
20.03.23 - 23.03.23
Investor Mission to Zambia, Lusaka
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