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 Perceptions
Survey, Lusaka, 20 January 2011.
* * *
The Deputy Secretary to the Cabinet, Mr Evans Chibiliti;
The Deputy permanent Secretary at the Ministry of Works and Supply, Mrs Bweupe
Kaonga;
The MEFMI Executive Director, Dr Elias Ngalande;
The IMF Country Representative, Mr Perry Perone;
Heads of Government Departments present;
Chief Executive Officers of various Companies and Associations present
Colleagues from Bank of Zambia;
Distinguished Participants;
Members of the Press;
Ladies and Gentlemen.
It is my honour and privilege to officiate at this very important Closing and Dissemination
workshop of Phase III of the Survey on Foreign Private Investment and Investor Perceptions.
As I welcome you all, I wish to convey my appreciation for your contributions to the success
of this project. May I, in this regard, express our special appreciation to the private sector
colleagues for their cooperation during the survey.
Let me also 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 Macroeconomic and Financial Management Institute
(MEFMI), and Development Finance International (DFI) for providing technical support to this
survey. With their technical support, the Government, through the Balance of Payments
Statistical 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.
Distinguished Participants, As you are aware, the Zambian economy has recorded
significant positive developments in the recent past, owing to the economic reforms the
Government has been implementing since 1992. These reforms have facilitated foreign
investments in various sectors of the economy. These reforms have also resulted in Zambia
recording tremendous improvement in world ranking with regard to the ease of doing
business. The favourable investment climate created has raised investor confidence in the
Zambian economy thereby attracting both local and foreign investments.
Ladies and Gentlemen, the survey findings we are disseminating today show that the
overall Foreign Private Investment inflows in 2009, declined to US $935.4 million from
US $1,932.8 million recorded in 2007. This was explained mainly by the notable reduction in
re-invested earnings, due to lower profits recorded by enterprises during the year. The
overall reduction in foreign investment inflows is also consistent with global developments. In
fact, at a global level, foreign direct Investment inflows drastically declined to
US $1,114.2 billion in 2009 from US $1,770.9 billion in 2008 and US $2,100.0 billion in 2007.
Nonetheless, new equity investment inflows in Zambia surged to US $419.2 million in 2009
from US $131.6 million recorded in 2007. The substantial increase in new equity
investments, despite the effects of the global financial and economic crisis, demonstrates
how favourable the Zambian investment climate is in attracting foreign investment.
It is also encouraging to note that the Government's diversification
Distinguished Guests,
efforts are yielding favourable results. The survey findings show that the concentration of
foreign direct investment in the mining sector is reducing as evidenced by the substantial FDI
inflows to other sectors such as manufacturing, wholesale and retail trade, and the tourism
sector in 2009.
Evidence from South East Asia and the recent global financial and economic crises show
that high volatility in foreign private capital if not properly monitored and managed, can
induce financial and macro-economic instability. In light of this the results of the Foreign
Private Investment and Investor Perception Survey are important and intended to assist the
Government to effectively monitor and manage these flows.
In addition, better information on investor perceptions will assist Government in designing
policies and programmes that will help enhance Zambia's favourable investment climate.
Further, the results of the survey should prove useful to the private sector and other
stakeholders as they highlight some concerns which Government should address as well as
the overall business profitability and performance prospects of various sectors. 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 financial crises and other external shocks.
Mr. Chairman, Zambia has adequate technical capacity to collect, analyse and disseminate
data and information on foreign private investment. It has, however, lagged behind in terms
of the frequency of these surveys compared with some other countries in the region. For
instance, while we are now at the third phase of the Survey, Uganda, Tanzania and Malawi
are in their eighth, fifth and fourth phases, respectively.
This only emphasises the critical need to conduct this enterprise survey more regularly. To
this end, I wish to reiterate the Bank of Zambia's, continued support and commitment in
working in close collaboration with Government and other Balance of Payments Statistical
Committee member institutions in ensuring 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.
I am particularly happy to learn that compared to other countries in
Distinguished Guests,
the region, the Zambian team 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 can only be improved
on. I have no doubt that we will sustain the record we have set within the Macroeconomic
and Financial Management Institute of Southern and Eastern African member countries.
I am confident that this workshop will achieve its intended objective
Ladies and Gentlemen,
of disseminating the findings of the survey and stimulate active participation and comments
from the various stakeholders. 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.