Caleb M Fundanga: Foreign private investment in Zambia
Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Closing
and Dissemination Workshop on Foreign Private Investment and Investor Perception Survey,
Lusaka, 4 June 2009.
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The Chairman;
Distinguished Invited Guests and Participants;
Members of the Press ;
Ladies and Gentlemen
Mr. Chairman,
It is my honour and privilege to officiate at this very important Closing and Dissemination
workshop of Phase II of the survey on Foreign Private Investment and Investor Perception.
As I welcome you all, I wish to convey my appreciation for your contribution to the success of
the project. May I, in this regard, express our special appreciation to the private sector
colleagues for their cooperation as respondents.
Ladies and Gentlemen,
Let me take this opportunity to extend my sincere gratitude to the Private Sector
Development (PSD) Programme, for providing financial support for this very important
project. Further, our thanks go to the COMESA Secretariat, United Nations Conference for
Trade and Development (UNCTAD), Macroeconomic and Financial Management Institute
(MEFMI), Development Finance International (DFI) and international consultants for
providing financial and technical support to this survey. With their financial and technical
support, the Government, through the Balance of Payments Committee, comprising
representatives from the Ministry of Commerce, Trade and Industry, Ministry of Tourism and
Natural Resources, Zambia Development Agency, Central Statistical Office and Bank of
Zambia, was able to undertake this very important survey. Without their support, it would
have been very difficult to complete this phase of the Survey.
Distinguished Guests,
As you are aware, the Zambian economy has recorded significant positive developments in
the recent past, owing to the wide-ranging economic reforms the Government has been
implementing since 1992. The reforms, which are aimed at stabilising the economy and
supporting economic recovery for the purpose of reducing poverty among our people, have
facilitated increased investment in various sectors of the economy, such as, agriculture,
tourism, construction and manufacturing. As you may also be aware, the mining sector has
attracted unprecedented amounts of investment in the recent past. Government's economic
reforms since the early 1990s have contributed immensely to the boosting both local and
foreign investors' confidence in the Zambian economy, which is an important pre-requisite for
attracting capital flows.
The survey findings that we are disseminating today indicate that Foreign Private Capital
flows to Zambia in 2007 rose to US $1,932.8 million from the US $176.3 million recorded in
2001. The 2007 inflows were largely in form of foreign direct investment, borrowing from
nonaffiliates (Loans and Trade Credits) and portfolio investment. We believe that the introduction
of economic reforms led to a substantial increase in private capital flows, which regrettably,
we have not been able to capture on a regular basis due to budgetary constraints.
Mr. Chairman,
History has taught us that high volatility in private capital flows, if not properly monitored and
managed, can induce financial and macro-economic instability in the domestic economy.
Evidence from South East Asia indicates that capital flows engendered a financial crisis in
that region in 1997 and 1998. In light of this evidence, the results of the Foreign Private
Investment and Investor Perception Survey are intended to assist the Government to
effectively monitor private capital flows. Accurate and reliable data on private capital
investment will be helpful in understanding recent developments in the Zambian economy.
Better information on investor perceptions will assist Government in designing policies that
will attract more investment into our economy. Further, the results of the survey should prove
useful to the private sector and other stakeholders.
On the whole, the importance of timely and reliable information on capital flows in the design
of appropriate policy responses by Government and thus enhancing macroeconomic stability
can hardly be overemphasised. Adequate and consistent information on capital flows will
also greatly improve Balance of Payments Statistics for Zambia and serve as an early
warning system for Government on potential international financial crises and other external
shocks.
Mr. Chairman,
Zambia, like many other developing countries, has inadequate capacity to collect, analyse
and disseminate data and information on foreign private capital investment. Compared with
other countries in the African sub-continent, Zambia has serious gaps with respect to data on
foreign private capital investment. For instance, while we are now at the second phase of the
Survey, Uganda, Tanzania and Malawi are in the sixth, fourth and third phases, respectively.
This only reveals to us the critical need to conduct this enterprise survey more regularly. To
this end, I wish to direct that, as a way forward, the Balance of Payments Statistics
Committee conducts this survey annually. The Bank of Zambia, in collaboration with
Government and other Balance of Payments Statistical Committee member institutions will
do everything possible to ensure that the collection of this vital information is done on an
annual basis. Accordingly, it is my hope that participants at this workshop will appreciate the
importance of this survey and find the results useful.
Distinguished Guests,
I am particularly happy to learn that the Zambian team compared to other countries in the
region, has conducted this enterprise survey in record time. It shows true commitment and
dedication of the team to this project. Please keep up the good work. Be reminded, however,
that you have established a benchmark, which we want to be associated with, and which
others will want to emulate. I have no doubt that we will beat the record we have set for
ourselves when we conduct the next survey. I am confident that this workshop will achieve its
intended objective of disseminating the findings of the survey and stimulate active
participation and comments from the various stakeholders.
Mr. Chairman, Ladies and Gentlemen,
It is now my pleasure and honour to declare this Closing and Dissemination Workshop on
Foreign Private Investment and Investor Perception Survey officially opened and wish you
fruitful deliberations.
I thank you.