ANGOLA

ZAMBIA
Zambia
que

zimbabwe mozambi
NAMIBIA BOTSWANA
Johannesburg (gtai) – 2013 was once again a year of rapid growth for
SWAZILAND the Zambian GDP, with 6.6%. Despite large Chinese interests, Zambia is
becoming an important market for German companies and products.
lesotho
Opportunities abound in the mining, energy, water, retail, agriculture and
SOUTH AFRICA
ICT industries.

Area 752,618 km² SWOT ANALYSIS

Inhabitants 14.08 million Strengths Weaknesses
Population Growth 2.89% Above average GDP growth Land-locked country, far from a
Official Languages English Relatively politically stable harbour
Capital City Lusaka Good road network Lack of skilled labour
Weaknesses in Administration and
Gross Domestic Profit Growth 6.6% Legal systems
President Michael Sata Small market at a population of
14 million
Ease of doing Business 83/189
Currency Kwacha: 1 US$ = 6,150 ZMK
(April 2014) Opportunities Threats
*CIA Factbook, worldbank, doingbusiness.org Commodities Economy too reliant on copper
Infrastructure investments Energy shortages
Development of the Gross Domestic Profit
Rising consumption through a Rising energy costs (26%)
Zambia’s GDP growth was 6.6% in 2013 and is expected to growing middle class Endangering of democratic stability
be over 8% in 2014, making it one of the fastest growing Subsidies from donor due to obstructing the opposition
economies in Africa. An important economic driver is the organisations
mining sector which grew 13.2% in 2012; the sector does not
have reliable statistics in terms of import and export figures
but it is estimated that mining represents 11% of GDP. Investment
The manufacturing industry grew by 12% in 2012 – 8.6% Foreign Direct Investment reached 1.066 billion US$ in 2012
to GDP. Zambia aims to attract manufacturing enterprises – a decrease of 4% from the previous year – but it is likely that
with Multi-Facility Economic Zones (MFEZ), which offer sig- foreign investment will rise in coming years. The Zambian
nificant tax- and tariff benefits. Development Agency (ZDA) has an economic development
The Zambian government is implementing an expansive plan which has seen confirmation of investment projects
fiscal policy, and high investment in infrastructure will totalling 10.1 billion US$.
support economic growth. Subsidies for maize and fuel are The realisation of these projects will span several years,
no longer available in Zambia; the government is prepared to with approximately 4 billion US$ in the mining sector, 700
make unpopular decisions to ensure optimum development. million US$ for the manufacturing industry and 600 million
The current government, the Patriotic Front (PF), has a US$ for the energy sector.
pragmatic leadership style. Since it came into power in 2011 State infrastructure plans are also underway and fuelling
there have been concerns about government intervening too the economy. Transport infrastructure and the energy sector
much in business. However, foreign investors are very trusting are the focus with 800 million US$ and 260 million US$
of Zambia as an investment destination as evidenced by the being spent, respectively. Investment in 2013 made up 28.2%
750 million Eurobond it received in 2012. of GDP.

KEY ECONOMIC DATA Consumption

Indicator 2011 2012 Comparative data, Strong economic growth in past years has had positive effects
Germany 2012 on the private buying power of Zambians. In Zambia’s cities,
GNP (nominal, 19.2 20.5 3,397 modern shopping centres populated with South African
billions of US$) chain stores can be found. The Copperbelt City Mall is under
GNP per Head 1,141 1,474 41,475 construction in the city of Kitwe, at a cost of 200 million
(nominal, US$) US$, and will be the largest shopping centre in the country.
Population (millions) 13.6 13.9 81.8 The last few years have seen per capita income increase
significantly, to 1.474 US$ in 2012. Zambia has become a
Source: IMF; Statistisches Bundesamt; Deutsche Bundesbank
lower-middle income country and high wage increases for
public servants in 2013 have increased individual buying
power even more.

88 ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014
 Selected Major Projects
Project Investment Project Status Comment
amounåt (US$)
Batoka Gorge Hydro power station 2.8 – 5 billion Planning stage Construction of a hydro power station at the Zambezi river with
a capacity of 1,600 MW. Joint project with Zimbabwe
Kafue Lower Hydro power station 2 billion Planning stage Construction of a hydro power station at the Kafue river with a
capacity of 750 MW
Link 8000 project 5.9 billion Completed by 2017/2018 Upgrade and further construction of road network, 8,000 km
Zambian Railway Programme 1.5 billion Completed by 2017 Upgrade and further construction of rail network
Indeni Refinery rehabilitation 450 million Planning stage Upgrade of the Indeni oil refinery in Ndola
Angola-Zambia Refined Petroleum 2.5 billion Planning stage Construction of a 1,400 km pipeline from the Lobito refinery in
Multi Product Pipleline Angola to Lusaka
Serenje Manganese smelter 60 million Planning stage Construction of a smelter for the production of 60,000 tons
ferromanganese and 9,600 tons silicomanganese, through
Zamaco
Sentinel Copper project 2.4 billion Completed by 2014 New copper mine, through First Quantum, with annual
production of 300,000 tons
Mwekera Copper mine 5 billion Planning stage New copper mine near Ndola, through Macrolink Resources
Kansanshi Copper mine extension 1.4 billion Completed by 2015 Increasing copper production to 400,000 tons, through First
Quantum
*Source: gtai

On the other hand, government is no longer subsidising example is the planned 3,500 apartment block with a value
fuel and maize; fuel prices increased by 21% in May 2013 of 500 million US$. Demand for construction materials
which has affected all consumers. Inflation is currently at is massive; the Zambia Development Agency expects an
7.5 - 8%. increase in demand for steel from 200,000 tons in 2011 to
300,000 tons by 2016. Chinese construction firms who bring
Foreign Trade their own machinery, are very active in Zambia.
Due to Zambia’s high copper export volumes, there is a
surplus trade balance. Machinery and equipment, in the ICT
mining or construction industries for example, have to be Zambia’s mobile telephone market grew by 29% in 2012. The
imported. three mobile service providers, Airtel (44.9% market share),
Trade volumes between Germany and Zambia are growing, MTN (38.8% market share) and Zamtel (16.4% market share)
with an increase of 49% from 2011 to 2012, totalling 123.3 service around 10.5 million people, a network coverage of
Million EUR. German exports to Zambia are at 90.4 million 78% of the population.
EUR. Actual figures are however considerably higher, as Unfortunately, networks have not been upgraded to
many exports go through South Africa’s port in Durban and keep up with the rapid increase in users. Government has
are then transported by South African firms. Export volumes taken legal action against the service providers to ensure
from Germany to Zambia experienced huge increases – by adherence to minimum standards. Only 17% of the Zambian
98.4% in 2012. population accesses the internet but there are opportunities
in this growing sector.
Zambian Export Volumes (US $ million)
2011 2012 Change Mining
Imports 6,454 7,361 14.1% The Zambian mining industry remains strong, with copper
mining showing the greatest growth. Copper output was
Exports 8,672 8,590 -1%
predicted to be 900.00 tons in 2013, a figure expected to
Source: EIU rise to 1.1 million tons in 2015 and 1.5 million tons in 2016,
thanks to the development of the Sentinel Mine and First
Construction Industry Quantum’s Kansanshi Mine.
The construction industry in Zambia is booming: it grew by Commodities besides copper are boosting the mining
15.8% in 2012, contributing 27.5% to GDP. Construction for industry. African Energy is exploring the south of Zambia
the mining industry, infrastructure development, shopping for coal, around the already existing Maamba colliery in
centres, offices and residential buildings are ongoing. An Sinazongwe. Kaboko Mining has found manganese deposits

89
 ZAMBIA

in the northern Luapula province. Furthermore, it is estimated Transport

that around 900 million tons of iron ore are to be found in Zambia has a wide-reaching road network, of more than
Zambia. 68,700 km. By 2018, 7,000 km of this network is to be
upgraded and developed to the value of 5.9 billion US$,
Machine and Construction of manufacturing in particular the transformation of the Lusaka/Copperbelt
plants highway to a dial-carriage highway.
The mining industry, with its high investment volumes and Rail is also a focus for the state, with Zambian Railways
numerous projects, has the highest demand for machinery, planning 2,500 km of rail connections with neighbouring
and construction of processing plants such as smelters. With countries.
growing private consumption, manufacturing and process-
ing of fast-moving consumer goods, especially in the food Energy
and beverage industry, is becoming an important industry in Despite hydro-electric potential of around 6,000 MW, there
Zambia (+11.8% in 2012). are energy shortages in Zambia. With a current capacity
Businesses such as breweries (Zambian Breweries) and of 1.985 MW, Zambia can experience an energy deficit of
slaughterhouses (Zambeef) are equipped in part with 70–250 MW. To combat these shortages, capacity from the
German technology and this growing industry presents Kariba North hydroelectric power station has been increased
interesting possibilities for German products in the future. by 360 MW. Construction of the Itezhi-tezhi storage dam will
In fact, according to the German Engineering Association secure another 120 MW. Large projects such as the hydro-
(VDMA), food processing and packaging machinery exported electric power stations of Batoka Gorge (1,600 MW) and the
to Zambia from Germany increased by 66% in 2012. Kafue Gorge Lower (750 MW), smaller projects from ZESCO,
and the construction of coal power stations, will all ensure
Environment energy capacity for the future.
More than 40% of the fresh water in southern Africa is
situated in Zambia but water infrastructure is desperately Tourism
needed to provide water to Zambians – only around 60% The Zambian tourism sector welcomed 906,000 tourists,
have access to fresh water. Water and sanitation infrastruc- growing by 12% to around 200 million US$ in 2012. Even
ture is especially urgent in Lusaka and in the Copperbelt so, the Zambian tourism sector is not yet operating at full
region, where population density is high. The Lusaka Water potential; experts estimate the market value at 700 million
and Sewerage Company’s 25-year plan, which amounts to US$. Challenges facing the industry are higher prices and less
an investment of 1.9 billion US$, will upgrade and develop tourist infrastructure in place than neighbouring countries
existing urban infrastructure, semiurban settlements, and such as Botswana and South Africa.
establish 2,500 water-supply wells for rural communities.
Agriculture
Medicine Zambia has huge agricultural potential; only 15% of the 60
State expenditure for the health sector rose by 40% in million hectares of arable land is being utilised. With around
2013. Hospitals are to be upgraded and provided with new 600,000 small farmers and 650 commercial farmers currently
equipment. The three initial projects are the University active, government is trying to develop small farmers and
Teaching Hospital in Lusaka and the Central Hospitals in is welcoming investors into the sector. The most important
Ndola and Kitwe, with funds of 40 million US$ being made agricultural product is maize, at approximately 998,000
available. The General Hospital in Livingstone and the hectares producing 2.85 million tons in 2012.
Chainama Hills Hospital in Lusaka will also be upgraded to The German agricultural company Amatheron Agri, is
international standards. Tenders for new district hospitals already active in Zambia, developing 32,000 hectares of
have also been issued by the Ministry of Health, catering land. The German Federal Ministry of Food and Agriculture
for over 70% of the population. In Zambia’s private health- (BMELV) is planning a training farm in Lusaka, where German
care sector, non-profit organisations and missions play an agricultural engineering will be adopted. 
important role.
Translated by M van Niekerk

90 ANNUAL REPORT OF THE SOUTHERN AFRICAN – GERMAN CHAMBER OF COMMERCE AND INDUSTRY 2013-2014