Zambia dethroning South Africa?

30 Jul 2013 - by Ed Richardson

Zambia’s psyche has tangibly
transformed over the past
few years from “being the
middle of nowhere” to
“being the middle of everywhere”.
Seeing Zambia as the central
hub for southern African trade
was a consistent theme through
the interviews
and meetings
FTW had with
industry leaders
during its
annual visit to
the country.
There
have been
references to
the geographic
centrality
of Zambia
during previous visits, but this
was the first where it emerged as a
consistent theme.
This has far-reaching
implications for the logistics sector
and the economy of the country
as a whole. Sentiment drives
investment, and as reported in
this feature, logistics companies
are investing in Zambia in order
to meet the needs of shippers and
cargo owners.
Freight is flowing because the
economy is growing. Critically, the
economy is diversifying and its
reliance on copper is diminishing.
There is a (still small) revival of
manufacturing combined with
major growth in agricultural
output.
Advertisers featured in this
special report are investing at all
points along the logistics value
chain, with some entering the
market for the first time. Others
are expanding into neighbouring
countries either through
alliances or by opening their own
subsidiaries.
Many are working hard to
ensure that their airfreight
business takes off. Zambia is
now served by British Airways,
Emirates, KLM, South African
Airways, Kenya Airways,
Ethiopian Airlines and TAAG
Angola Airlines.
The number of dedicated
freighters serving both Lusaka and
Ndola continues to grow.
Industry has the backing of
government, which offers investors
attractive incentives, and is
working on reducing business red
tape and border bottlenecks.
Zambia is also a signatory to
a number of trade agreements
designed to facilitate intra-African
trade.
According to the 2013 Economic
Development
in Africa
Report by the
United Nations
Conference
on Trade and
Development
(Unctad),
Zambia is a
member of the
Common Market
for Eastern and
Southern Africa
(Comesa), the Southern African
Development Community (SADC)
and International Conference on
the Great Lakes Region (ICGLR).
Investors in Zambia are also
seeing a good return. According
to the 2013 World Investment
Report, Zambia ranks 17th in
the top 20 global economies
with the highest inward
foreign direct investment (FDI)
rates of return in 2011 – on a par
with Bolivia, the Czech Republic
and Russian Federation; and
ahead of Honduras and Chile.
In 2012, Zambia attracted up to
US$1066 billion in FDI.
This is slightly below the
US$1108 in 2011, but 53%
ahead of the US$695 million of
2009 during the international
financial melt-down.
Much of this investment is from
China, according to the
report. But investors
from Japan, South
Africa, India,
Canada and
the United
Kingdom
are
challenging
this
dominance.
Zambia’s
trade links
also show
an interesting
pattern.
According to Ernst
& Young, Zambia’s
major trading partners are China
(21.4%), Saudi Arabia (8.9%), DRC
(8.6%), South Korea (8.3%) and
Egypt (8.1%).
There are also major logistics
investments driving growth: The
World Investment Report singles
out the Angola-Zambia Refined
Petroleum Multi-Product Project,
which involves Ba Liseli Resources
(Zambia) constructing a 1400-km
pipeline and related infrastructure
from a refinery in Lobito, Angola,
to Lusaka, Zambia.
The overall project represents
an investment of US$2.5 billion
within the framework of a publicprivate
partnership. Of this,
US$168 million was announced in
2012 as Zambia’s first greenfield
project in Angola since 2003.
But the key to unlocking
intra-African trade and reducing
the overall cost of doing business
on the continent lies in rail –
and here the consensus (even
among trucking companies) is
that the region’s authorities have
failed to build up the necessary
head of steam to drive the revival
of rail.
There are plans and policies, but
road is likely to be the main artery
connecting the Zambian hub to the
rest of the region for the next five
to 10 years at least.