Zambia: Short Country Focus

Zambia: Short Country Focus

After expanding by an average of nearly 6% for the past nine years, the longest period of growth since independence.

Zambia was named in 2010 by the World Bank as one of the world’s fastest economically reforming countries. Praised for boosting economic growth, cutting foreign debt, attracting foreign investment and pursuing an aggressive anti-graft campaign as well as having excellent fiscal management in a hard time.
One of Sub-Saharan Africa's most highly urbanized countries with about one-half of the 11.5 million people concentrated in a few urban zones there has been a diverse range of positive macroeconomic reforms recently implemented.

With a floating exchange rate and open capital markets all providing a useful discipline to the government. With a much needed and continued diversification of Zambia’s export sector. A growth in the formerly large tourism industry and a range of procurement of inputs for growing businesses and massive capital re-investment in the economically vital copper industry engendering multiple spin-off effects.

With Zambia possessing approximately 6% of the World’s copper reserves mining these vast copper-ore deposits is central to the economic prospects of the country. Accounting for virtually all-foreign currency earnings and 17% of GDP.

Surging copper prices fuelled by voracious demand from electronics manufacturers have boosted the prospects for the economy with world prices leaping back to nearly $6,900 a tonne and pushing Zambia’s projected output this year up to 666,000 tonnes, three times its level when the mines were sold off a decade ago.

In response to this capital has poured in and rekindled international interest in Zambia’s buoyant copper sector. Exemplified by the huge Chinese-Zambian economic partnership zone in Chambishi.

So whilst the economy remains relatively undiversified and vulnerable to exogenous risks – most pointedly a drought in the copper price - the country has a positive economic outlook. With a banking sector that is liquid and well capitalised and a democratic political structure that is viewed as a stable.

With elections in 2011 not predicted to cause any widespread unrest and the likelihood of a smooth transition or continuation of political power depending on the outcome.

Sub-Saharan Africa more generally will be one of the fastest-growing regions of the world in 2011. Thanks to surging demand both from abroad - and at home fuelled by increasing urbanisation and consumerism and an expanding middle class increasing demand for modern goods and services.

In addition the arrival of new submarine fiber-optic cables that will boost bandwidth, cut costs and stimulate businesses that rely on technology with the fastest-growing areas likely to be in telecoms, banking, retailing and manufacturing and the provision of financial services to ordinary people, including Tele-banking predicted to thrive.

With recovery in Western economies still looking fragile, there will be a growing appetite to invest in Africa, adding to the forays already made by China and India.

As a result, investors will find it increasingly difficult to ignore the area with Zambia ideally positioned to benefit from this new geo-economic reality not least because it has some of the best land and most copious water on the continent.

Outsiders will want to buy or lease cheap agricultural land especially the food-importing countries poor in land and water but rich in capital, such as the Gulf States, and countries with large populations and food-security concerns, such as China, South Korea and India at the forefront.

There is every reason that Zambia in 2011 will find itself newly fashionable. With investors distinguishing between countries that are starting to live up to their potential rather than those whose politics and economic policy will keep them stuck in the slow lane.


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