# Presentation: 044860

## Pam Tremont – Embassy Lusaka Political/Economic Chief
February 20, 2009

- Pam Tremont – Embassy Lusaka Political/Economic Chief
- February 20, 2009

##  Zambia

- Estimated 12.5 million
- 4.9 million working (2005 survey), but 84.3%     underemployed
- 38 % urbanized
- 68% live below the poverty line, mostly rural
- 85% employed in agriculture
- ~15% (1 million people) HIV positive
- life expectancy at birth 51 yrs.

-  Zambia

- 2009

##  Zambia

-  Politically stable
-  Presidential bi-elections took place 30 October
-  Rupiah Banda elected by just 30,000 votes
-  Parliament very weak
-  Next presidential and parliamentary elections to be
-    held in 2011
-  Expect ruling MMD to face real challenge for first    time since multiparty democracy began 1991

-  Zambia

- 2009

##  Zambia

- 2008 real GDP growth: 5.8 %
- December 2008 yr-on-yr inflation: 16.6%
- Agriculture is16% of GDP, mostly subsistence
- Copper/cobalt exports are 75 % of export earnings
- Copper prices fell >50% in 2008
- Kwacha depreciated Kw 3,100 to 4,900 = $1

-  Zambia

- 2009

##  Zambia

-    Expensive financial services/credit –  >20% p.a.
-   High costs – fuel, telecoms, **transportation**
-   Continued government hold on utilities, energy
-   Stringent labor laws, unskilled labor
-   Volatile Kwacha
-   Pervasive corruption
-   Weak court system and IPR enforcement
-   Complex permit/licensing, lacking transparency

-  Zambia

- 2009

##  Zambia

**Fall in Copper Prices has caused lost income and thousands of lay-offs**
**Government seeking to diversify away from reliance on copper, by diversifying within agriculture and expanding tourism**

-  Zambia

- 2009

##  Zambia

**Agriculture**
- Employs 85% of people, but only 15% of arable     land utilized, mostly subsistence maize
- Soils/climate are suitable for growing a variety     of high value crops, transport difficult
- Opportunities in equipment, chemicals, agro-     processing, poultry/fisheries/livestock      production, extension services
- Zero VAT on some equipment imports

-  Zambia

- 2009

##  Zambia

**Tourism**
- GRZ tripled budget to $77 million for 2009 to     draw developers to Kasaba Bay, Livingstone,     South Luangwe
- Airports, roads, electrification
- Not articulated preference for low v. high-end      tourism
- WEF high marks in tourism competitiveness

-  Zambia

- 2009

##  Zambia

**Mining**
- Remains an economic mainstay – copper,     cobalt, uranium, gold, gemstones
- 2008 tax regime shattered confidence, removed     windfall tax in 2009
- One-year depreciation on imported equipment
- Smelters must reach U.S./EU environmental     standards by 2015

-  Zambia

- 2009

##  Zambia

**Energy**
- Artificially low tariffs have deterred investment
- Insufficient capacity results in load shedding
- Cost-recovery tariffs by end-2010
- Quarter of region’s water goes through Zambia
- GRZ to accelerate hydroelectric projects,     but continues to control transmission and      distribution

-  Zambia

- 2009

##  Zambia

**Transport Infrastructure**
- Budget increases in infrastructure – roads, rails
- Railway barely functional, high transport costs
- Seeking support for North-South Corridor
- Zambian Airways bankrupt

-  Zambia

- 2009

##  Zambia

**Health Care Services**
- 15% HIV positive, even more die of malaria
- After mining and agriculture, HIV is the next      largest industry in Zambia
- USG spends $270 m/year for PEPFAR
- Includes upgrading health care facilities

-  Zambia

- 2009

##  Zambia

**Telecommunications**
- Parastatal Zamtel being privatized
- Questionable procedures for evaluation
- Cell phone upgrading more promising
- Internet penetration low, expensive, unreliable

-  Zambia

- 2009

##  Zambia

- Licensing through a local representatives
- Indirect exports through (often RSA) intermediaries
- Franchising, direct exporting, greenfield more rare
**Whatever market entry strategy is chosen, businesses should bear in mind that entering a market will require local expertise on legal and regulatory issues and to manage red tape. **

-  Zambia

- 2009