caleb m fundanga : growing investor confidence in zambia ’ s economy opening remarks by dr caleb m fundanga, governor of the bank of zambia, at the afreximbank / pta bank financing agreements signing ceremony, lusaka, 10 june 2008. * * * • the president of afrexim bank • the president of pta bank • chief executives and representatives of financial institutions present • distinguished ladies and gentlemen i am greatly honoured to be given an opportunity to make these brief remarks at this signing ceremony of two important financing agreements. i wish to extend a warm welcome to all of you gathered here today, particularly those who have travelled from outside the country. i hope that you will not only have a pleasant ceremony today but also have fruitful deliberations at the euromoney conferences starting tomorrow at this same venue. i also hope you will find time to explore the beautiful scenery and experience the warm hospitality that zambia has to offer. mr president, ladies and gentlemen, over the recent past, the zambian economy has performed relatively well. this is reflected in the overall macroeconomic stability which has been underpinned by positive growth rates in real gross domestic product, low inflation, relative stability in the exchange rate of the kwacha against major currencies, stable financial sector and improved banking services. however, although incomes have generally increased, the challenge that still remains is that of meeting the basic needs of the majority of zambians in order to uplift their living standards. this ceremony is therefore more than timely as the government is working tirelessly towards empowering its citizens economically and at the same time increasingly diversifying the economy and promoting export led growth. it is for this reason, mr president that the government established the citizen ’ s economic empowerment fund under the citizens economic empowerment act of 2006 in order to promote empowerment of citizens in various economic activities. this signing ceremony is yet another indication of the growing investor confidence in zambia ’ s economy. you will be glad to note that the country ’ s total investment pledges rose more than ten times over to us $ 1. 9 billion in 2007 from us $ 115. 6 million recorded in the year 2001. this is an indication of the vast investment potential and improving investor confidence due to the macroeconomic stability particularly lower inflation and the sound fiscal polices that the government has put in place. institutional capacity has also been enhanced with effective supervision of the financial system to promote efficient operations of the banking sector. mr president, the mining sector continues

sector performance has continued as evidenced by an improved balance of payments position. this has been on account of higher foreign exchange inflows emanating from increased metal and non - traditional exports earnings coupled with investor confidence in the zambian economy. the nontraditional exports have continued to record unprecedented growth over the past couple of years. for instance, ntes rose by 63. 4 % to us $ 924. 4 million in 2007 from us $ 564. 7 million in 2005 with commodities, such as, sugar, copper wire and tobacco, coupled with receipts from tourism making notable contributions. the growth of this sector is expected to be further bolstered by the establishment of the multi - facility economic zones in lusaka and chambishi to further diversify the economy and promote trade, stimulate export activities, technology, skills transfer and job creation. in pursuing an export - led growth strategy, the economic zones would actively promote value addition in identified specific products, such as, copper, vegetables, tobacco, gemstones, cotton yarn, leather products, sugar and oil cakes, of which the country has a competitive advantage. for instance, there has been a large increase in tobacco production, which has led to increased export earnings. unfortunately, much of the tobacco is exported in a raw form with very little treatment or processing in the country. significant investments in plant and machinery for value - addition will therefore be needed to offset this scenario. thus, with expected large investments in economic zones and export fund facilities like the one we are witnessing today, zambia ’ s competitiveness through value addition is expected to improve. mr president let me also commend all the institutions involved in the two syndicated loans. it is gratifying to note that these facilities have been made possible due to the partnerships between the local financial institutions and international ones. i commend such partnerships and challenge other local institutions to enter into similar arrangements to reduce the cost of borrowing and promote growth in zambia. congratulations should be extended to the zambia national commercial bank, als capital and calag capital, afrexim, pta bank and loita capital to name but a few for the initiative. the bank of zambia has continued to encourage local banks and other financial institutions to partner with international financial institutions and other banks in africa, europe and asia. in this regard, in december 2007, the bank organised a forum to exchange information on sources of finance in lusaka. the forum was well attended and the international institutions showcased their products