Zambia, located in Southern Africa, has a growing economy that is ripe for business opportunities. With a stable political environment, growing middle class, and abundant natural resources, the country offers potential investors a wealth of opportunities. In this article, we will explore some of the challenges and rewards of doing business in Zambia, which industries are growing in Zambia, and why global companies may be interested in expanding their reach to Zambia.
Ireland Department of Foreign Affairs, which provides a thorough guide to doing business in Zambia, states that “Although the economy is expected to be under pressure in the next five or so years, the longer-term future of the economy looks positive.” One reason for this is the young population and rapidly growing middle class.” Since the population is growing at about 3% each year, it will double its population in about 25 years. “Importantly, Zambia has maintained peace and political stability as public institutions continue to mature,” as shown when political parties who had been in power for 20+ years peacefully accepted defeat at the polls in 2011.
Yet one of the biggest challenges of doing business in Zambia is the lack of infrastructure. Poor roads, limited electricity, and an underdeveloped telecommunications network can make it difficult for businesses to operate efficiently. However, this also presents an opportunity for businesses that can offer solutions to these infrastructure challenges. Additionally, the government of Zambia is working to improve the infrastructure and has launched initiatives to attract foreign investment, such as the Zambia Development Agency (ZDA), which offers a one-stop-shop for investors looking to start a business in Zambia.
Another challenge of doing business in Zambia is corruption. The country ranks 117 out of 180 countries in Transparency International's Corruption Perceptions Index. However, the government has taken steps to combat corruption, including the establishment of the Anti-Corruption Commission and the introduction of the Public Procurement Act.
Despite these challenges, there are many rewards to doing business in Zambia. One of the most attractive aspects of the Zambian market is its young and growing population. With a median age of just 17 years old, Zambia has a large and rapidly expanding consumer market. The country's middle class is also growing, with increased purchasing power and a desire for higher quality products and services.
Specific Industries to Keep an Eye on in Zambia
Fast-moving consumer goods (FMCG) are products that are sold quickly and at a relatively low cost, such as food, toiletries, and cleaning supplies. The FMCG sector is growing rapidly in Zambia due to an increase in disposable income, urbanization, and a growing middle class. This presents significant opportunities for investment in the country.
Beverage companies are a major player in the FMCG sector in Zambia. The market for non-alcoholic beverages is dominated by Coca-Cola, which has a strong distribution network in the country. Other players in the market include PepsiCo, which recently opened a bottling plant in the country, and SABMiller, which produces popular local brands such as Mosi Lager and Castle Lite.
In addition to non-alcoholic beverages, the alcoholic beverage market in Zambia is also growing. The market is dominated by local breweries such as Zambian Breweries and National Breweries, which produce popular brands such as Mosi and Chibuku. However, there is also a growing market for imported beers and spirits, which presents an opportunity for global companies to enter the market.
The demand for FMCG products in Zambia is expected to continue growing in the coming years, driven by urbanization and a growing middle class. This presents significant opportunities for companies in the sector, including beverage companies, to expand their reach in the country. However, there are also challenges to doing business in Zambia, including a lack of infrastructure and a complex regulatory environment. Companies looking to enter the market should partner with local agencies or consult with experts to navigate these challenges and take advantage of the opportunities presented by the growing FMCG sector.
The agricultural sector is one of the most promising industries in Zambia. The country has a large amount of arable land and a favorable climate for agriculture. According to the International Trade Administration’s Zambia Country Commercial Guide, the government is actively encouraging investment in this sector and has implemented policies to support small-scale farmers. “Zambia’s temperate climate and abundant water resources make it a potential breadbasket for all of Africa through small-, mid-, and large-scale farming operations. However, agricultural yields are typically below potential and labor productivity on the farm remains low due to the lack of improved agronomic practices, mechanization, and access to improved inputs, such as seeds and fertilizers. There are also significant potential opportunities for investment and value addition in cold chain storage and food processing targeting large regional markets such as the Democratic Republic of the Congo, and South Africa” (ITA). In addition to traditional crops such as maize and cotton, there is growing interest in cash crops such as macadamia nuts and avocados, as well as livestock farming.
Another growing industry in Zambia is mining. The country is the “the second largest copper producer in Africa and the seventh largest in the world” and also has significant deposits of gold, gemstones, precious metals such as gold, silver, gemstones (amethyst, aquamarine, emerald, and tourmaline), coal, industrial minerals, and other minerals. “A constantly shifting tax and regulatory regime under the previous administration hindered foreign investment and led to a generalized decline in exploration,” but potential exists here, especially if the government were presented with more foreign investment opportunities (ITA). “With global copper prices booming…immense potential exists for both extraction and value-added industries” such as exploration, mining services, water management, engineering, construction, and environmental services (ITA).
Zambia also has potential to become a top tourist destination in Africa since it boasts 20 national parks, 34 game management areas, and Victoria Falls, one of the seven natural wonders of the world. Zambia also has a diverse range of wildlife, including elephants, lions, leopards, and hippos, making it an ideal destination for safari enthusiasts. In addition, the country has several national parks, such as the South Luangwa National Park, which is known for its excellent game viewing opportunities. Zambia also has a rich cultural heritage and is home to several traditional tribes, which offer visitors a chance to experience their unique customs and traditions. In order for Zambia to bring tourists to their rich landscape, however, infrastructure needs to be established to make travel within the country more accessible and reliable.
Thus there are many opportunities in developing infrastructure, since “The government has expressed a desire to begin using public-private partnership models of infrastructure development” (ITA). The energy sector is also favorable for outside investment and development, particularly in renewable energy such as solar and hydropower. “Demand for electricity has grown at an annual rate of about three percent, and generation development is starting to grow. Investment opportunities exist in electricity generation, especially in the off-grid market, upstream and downstream petroleum, and renewable energies” (ITA).
The Zambian government has also been making efforts to improve access to Information and Communications Technology (ICT) services, and has implemented policies and strategies to promote the growth of the sector. The ICT industry in Zambia is still in its nascent stages, but it has the potential for significant growth in the coming years. The National ICT Policy, for example, aims to promote the use of ICTs in all sectors of the economy, and to increase the availability and affordability of ICT services. “Furthermore, the government has taken positive steps by creating a Ministry of Technology and Science and by updating its outdated ICT policy. Zambian financial services companies and retailers have focused on developing the country’s burgeoning digital market, creating new opportunities in the provision of retail fiber optic, mobile, internet service providers, software development and sales, and ICT business parks” (ITA).
Zambia's growing population of technology consumers is also driving the growth of the ICT industry. According to a report by the International Telecommunications Union (ITU), the number of mobile phone subscriptions in Zambia increased from 10.2 million in 2015 to 14.7 million in 2019. This growth in mobile phone subscriptions is expected to continue, driven by the increasing affordability of smartphones and mobile data. Thus, Zambia is also becoming an attractive destination for ICT investment, with a number of multinational companies establishing a presence in the country. For example, Microsoft opened an innovation center in Zambia in 2013, and MTN has invested in the country's telecommunications infrastructure.
Conclusion
Global companies may be interested in expanding their reach to Zambia for several reasons. The country has a growing consumer market that is hungry for higher quality products and services. Additionally, Zambia's location in Southern Africa provides access to other regional markets, such as the Democratic Republic of Congo and South Africa. While there can still be many frustrations with navigating the ever-changing policies, the government is actively encouraging foreign investment and has implemented policies to make it easier for businesses to start and operate in the country. Plus, the government has made a commitment to improving infrastructure and combating corruption.
Thus, the challenges to doing business in Zambia can be significantly outweighed for businesses that are willing to invest in the country. With the right approach and using resources like Kasi Insight to best inform your business decisions, Zambia can be a gateway to the wider African market for businesses looking to expand their reach.
Contact our team today to explore how our economic intelligence can empower your decision-making process. Win with confidence with Kasi insights https://www.kasiinsight.com/thehub
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