Trade and Investment

General information on Zambia
Economic Review
Business and Investment
Finance
Agriculture
Tourism
Mining
The Netherlands & Zambia
Useful Addresses
Useful Links

General information on Zambia

Zambia is a landlocked country covering an area of 752,612 square km. To the north it is bordered by the Democratic Republic of Congo, and Tanzania, to the west by Malawi and Mozambique and to the south by Zimbabwe and Botswana. The Victoria Falls, one of the seven natural wonders of the world is located at the southern border of Zambia with Zimbabwe. Located between latitude 10 and 18 degrees south of the equator, Zambia sits on a plateau between 900 and 1550 meters above sea level.

Zambia has three distinct seasons, hot, dry from September to October with 27-32 degrees Celsius; warm, wet from November to April and the cool season from May to August when temperatures range from 16-27 degrees. Average annual rainfall is between 508 and 1270 mm.

Zambia's population is approximately 10.3 million of which about 1.5 million live in Lusaka, the capital city. About 38% of the people live in urban areas, resulting in Zambia having one of the lowest rural population rates in Africa. 46% of the population is between 15 and 64 years of age.

The majority of the people are African but there are Asian and European minorities. English is the official language, although there are seven main local languages spoken. Christianity is the main religion with Islam, Hinduism and Buddhism making up the rest.

Zambia was a British colony from 1911, its' borders having been created by European settlers, notably Cecil Rhodes. It came under direct British rule in 1924, but later it came under the Federation of Northern Rhodesia, Southern Rhodesia and Nyasaland in 1963. In 1964 Zambia attained independence and became a republic. In 1972 Zambia was declared a one-party state, but the government was forced to revert back to multi-party politics due to pressure from the populace in 1991. Zambia's constitution provides for an executive president elected for a term of five years.

Lusaka has a number of international hotels offering first class business and conference facilities and the selection of restaurants reflects the city's cultural diversity. There are three golf courses, sports clubs and civic service. Livingstone is the former capital and is located just eight kilometres from the Victoria Falls and is the most important tourist centre. The Copperbelt is the main mining area, with a high population.

Economic review

Zambia has a relative open economy, which depends on the mining sector that is the backbone of the economy and the major source of foreign exchange. Since the privatisation of the mines at the end of the past century, Zambia has posted economic growth at an average of almost 5% between 1999 and 2005. In the last few years, the Non-Traditional Export sectors have emerged and contributed to growth, jobs and income in mainly rural and peri-urban areas.

Sustained efforts in the last years to strengthen the public finances have contributed to improved macroeconomic stability and economic growth. The main drivers of economic growth have been mining, construction, wholesale and retail trade, real estate and business services, manufacturing, tourism and agriculture.

In late 2005 the Zambian Kwacha that has been stable over the last few years, posted an appreciation of nearly 30% against major foreign currencies. This was on account of reduced foreign exchange outflows as the country reached the HIPC Completion Point, strong inflows from foreign investors and increased foreign exchange earnings from metal copper exports that are currently enjoying very high prices on the international markets.

Economic Indicators (2005)
Exchange Rate	ZK4,464 =US$1
Inflation (2005)	15.9%
GDP (2004)	US$5.4 billion
Real GDP growth rate	4.6%
GDP per Capita	US$490
Exports	US$1,588 million
Imports	US$1,845 million
Principal Exports	Copper, Cobalt, Lead, Zinc, Tobacco, Sugar, Cut Flowers, Vegetables and Cotton
Principal Imports	Crude oil, Chemicals, Machinery and Foodstuffs
Main Export Destinations	United Kingdom, South Africa, Tanzania, Switzerland, India, Japan, China, Hong Kong, Kenya, Malawi and D.R. of Congo
Main Import origins	South Africa, United Kingdom, Kenya, Japan, Hong Kong, China and Zimbabwe
Literacy	80%
Natural Resources	Copper, Zinc, Cobalt, Electricity, Lead, Gemstones, Wildlife, Arable Land, Water

Business and Investment

In line with the economic reforms, Zambia is encouraging private investment in all major productive sectors including agriculture, mining, manufacturing and tourism and energy. It has introduced new economic policy measures, liberalised open market trade and investment conditions. Export processing zones have been established and applications for zoning are being encouraged.

Investment opportunities exist via privatisation of textile mills, collieries, services, and fertiliser and chemicals manufacturing. Zambia also has opportunities for investment in the agro-industry (horti-floriculture, tobacco-processing, cotton-ginning, crop production for the processing industries); in industry (consumer goods); in tourism (quality holiday accommodation, managed safaris, licensed hunting safaris and organised holidays in white-water rafting and other adventure /adrenaline sports).

There are several institutions that have been set up for promotion of investment and trade support, notably the Zambia Privatisation Agency, ZPA (www.zpa.org.zm) ; Zambia Investment Centre, ZIC (www.zic.org.zm); Zambia Export Processing Zones Authority, EPPZ, Export Board of Zambia, EBZ (www.ebz.co.zm). In 2006, these institutions will be brought under the umbrella of a one stop-shop for investors: the Zambia Development Agency (ZDA). To attract investors, Zambia offers a package of investment incentives, some of which are sector-specific (see ZIC website for full details and contact EPPZ, address given below). In addition the tax regime is investor friendly with no capital gains tax, but property transfer tax is applicable on the transfer of immovable property and on stocks and shares in Zambian incorporated companies. The Zambia Revenue Authority, ZRA, is the institution in charge of taxes (see www.zra.org.zm for full details). Investors are recommended to consult about the latest development with regard to the Citizens Economic Empowerment initiative, which encourage the meaningful participation of citizens in companies. The CEE will affect the way of doing business in Zambia.

Finance

The financial system has been liberalised following the Banking and Financial Services Act of 1994 and 2000 that provides for regulation of the conduct of banking and financial services and safeguards for investors and customers. The central bank is equipped with powers to deal with flouting of prudential and regulatory requirements. Public confidence in the Zambia financial system has grown, as it is seen to be stable, with automated teller machines and computerised services. There are currently nine commercial banks, with four of these being major international banks.

The merchant banks also offer project finance, trade finance, syndicated lending and advisory services for new public issues and private placements. The Lusaka Stock Exchange, LUSE, was opened in 1994, and presently 13 companies are listed while 12 are quoted. One of the most successful rights issue was when Zambia Breweries managed to raise US$8.5 million to refinance a loan. There are no restrictions on foreign investments on the LUSE. LUSE applies a code on corporate governance for its listed companies. In 2005, LUSE registered the highest return on investment (125%) of all stock exchanges in Sub-Saharan Africa.

Agriculture

Zambia has excellent potential for development in the agricultural sector, being well endowed with good soils (60 million hectares good arable land, of which only 15% is in use), ample surface and underground water, climatic conditions suited to a wide variety of crops including wheat, soya, bean, coffee, cotton, tobacco, sugar, paprika etc.

There are large scale farming operations in ranching and cropping in the Southern Province, Central Province, Copperbelt and Northern Province (tea). The horti- and floriculture industry has developed around Lusaka, but experienced a serious set-back following the appreciation of the Kwacha. Zambia has prime livestock rearing areas with about ten million hectares of land available for ranching. There are disease free regions suitable for ranching premium cattle and raising livestock. In the recent years inadequate infrastructure and extension services have resulted in animal losses due to East Coast Fever (Corridor Disease), Foot and Mouth in the Southern and Northern Provinces, Contagious Bovine Pleura Pneumonia in Western Province. New Castle Disease affected poultry in some parts of the country sporadically.

Zambia has rich forestry reserves consisting of pine and eucalyptus, but logging is threatening the natural resources. In terms of fisheries, commercial fish production is about 70,000 tonnes per year. Both government and the private sector are involved in the fisheries industry and are working to implement programmes of sustainable fishing practices.

Tourism

Zambia has a rich natural heritage that includes waterfalls, rivers, lakes and a wealth of wildlife roaming in its vast sanctuaries. The Zambia National Tourist Board is responsible for tourism development and promotion (see www.zambiatourism.com). There are 19 national parks and 34 game management areas with a total of 65,000m set aside for wildlife conservation. The Victoria Falls is attracting a lot of foreign investment around the Livingstone area. Legal requirements for setting up and operating tourism enterprises are extensive, with the ZNTB licensing all businesses in the industry. (See also www.zambiz.co.zm)

Mining

Apart from copper and cobalt, Zambia is endowed with reserves of gold, uranium, nickel, lead-zinc, iron and manganese. Gemstone deposits include emeralds, amethysts, aquamarine, rubies, garnets and diamonds that are still unexploited.

Other aspects of Zambia are good energy resources, a reasonable road network, air, and rail transport and a harbour on Lake Tanganyika. There are two international airports at Lusaka and Livingstone, and 130 small airfields of which one third is government-owned.

The Netherlands and Zambia

Trade and investment relations have been modest over the last few years, with Zambia posting a positive trade balance with the Netherlands. The export figure does not include the flowers from Zambia in transit to other countries that are sold via the Dutch auctions. The Netherlands exports to Zambia are very modest and have been shown a positive trend in the last few years. These consist of chemical products, veterinary drugs, and machinery and transport equipment.

Trade Netherlands - Zambia (million Euro)
	Imports	Exports
2002	24,4	5,5
2003	19.0	7.7
2004	27.6	9.7

Although the importance of Dutch-Zambian economic relations seems modest when seen through Dutch eyes, the Netherlands is nevertheless, an important country for Zambia economically. The Netherlands is the second biggest European investor after the United Kingdom in Zambia; investments with a Dutch component amounted to over USD155 million in the last ten years. Currently, the largest investments are in manufacturing, agriculture, tourism and renewable energy. To facilitate bilateral economic contacts and protect the growing levels of Dutch investments, the Netherlands and Zambia have signed a bilateral Investment Protection and Promotion Agreement in April 2003. It has been ratifiied by the Dutch Parliament and is awaiting ratification by the Government of the Republic of Zambia. Upon ratification, the agreement will be in force for 15 years and can be extended for another 10 years. It will accord on a reciprocal basis, fair and equitable treatment to investments, protection from expropriation, compensation for losses arising out of armed conflict, riots, state of national emergency. In case of disputes, settlement mechanisms have been incorporated in the agreement. Zambia is eligible for the Program for Emerging Markets (PSOM) which has been partially untied to facilitate NL-Zambia and South-South joint investments for innovative or pilot projects in agriculture and agro-processing, tourism, water and information communication technology.

The Netherlands is one of the leading markets for Zambia's non-traditional exports, ranking second after the United Kingdom in the EU. Of Zambia's cut-flower exports, 95% go to Holland, from where they are re-exported to other parts of Europe. Other major exports from Zambia to Holland include coffee and tobacco.

Useful Addresses

Zambia National Tourist Board
P.O. Box 30017
Lusaka
Tel: +260 (0)211 229 087/90
Fax: +260 (0)211 225 174
www.zambiatourism.com

Zambia Privatisation Agency
P.O. Box 30189
Lusaka
Tel: +260 (0)211 223 859
Fax: +260 (0)211 225 270
www.zpa.org.zm

Zambia Investment Centre
P.O. Box 34580
Lusaka
Tel: +260 (0)211 255 240
Fax: +260 (0)211 252 150
www.zic.org.zm

Export Board of Zambia
P.O. Box 30064
Lusaka
Tel: +260 (0)211 228 106/7
Fax: +260 (0)211 222 509
www.ebz.co.zm

Zambia Revenue Authority
P.O. Box 35710
Lusaka
Tel: +260 (0)211 223 233
Fax: +260 (0)211 222 729
www.zra.org.zm

EVD
Middle East and Africa
Regional Information Manager Southern Africa (Botswana, Malawi, Namibia, Zambia and Zimbabwe)
Bezuidenhoutseweg 181
Postbus 20105
2500 EC Den Haag
Tel: +31 (0)70 778 8670/73
Fax: +31 (0)70 385 8097
www.evd.nl

Useful Links

General
www.zambiz.co.zm

www.zambia.startkabel.nl

Government of Zambia

State House
www.state.gov.zm

Central Statistical Office
www.zamstats.gov.zm