Freight and logistics companies
in Zambia are navigating
their way through what is
being described as a “perfect
storm” of events and factors outside
of their control.
These include the global decline in
commodity prices, a 60% drop in the
value of the kwacha against a basket
of currencies, drought, energy cuts of
up to eight hours a day and political
uncertainty.
This adds up to Zambia’s worst
economic crisis in more than 10
years, according to African Economic
Outlook 2016 published by the
African Development Bank.
Real economic growth fell to its
lowest in 15 years. Contributing
factors include a decline in maize
output by 22% due to poor rains, and
a 28% drop in copper prices year-onyear.
An electricity-supply deficit, which
began in June 2015, has affected
manufacturing and other businesses.
It is estimated by the Economic
Outlook that 40-50% of baseload
was lost due to low water levels as the
country is reliant on hydro power.
This led to daily load shedding
and increased operating costs as
firms have had to invest in diesel
generators.
This cost has been passed on
to consumers, contributing to an
inflation rate that is hovering around
21% – compared to 7.1% in July 2015.
Investors have held back ahead of
August 11 general elections because
of concerns that the result will be
contested, leaving the country in
political limbo for several more
months at least.
Presidential candidates have to
secure 50% +1 to win an election.
Most affected has been project
cargo, as most of the mines have cut
back on investment.
Zambia’s reliance on copper
is adding strength to the storm.
According to a World Bank analysis,
Zambia is one of the countries that
will not gain from China’s switch to
a more consumption-based growth
model.
It will need to focus more on
agricultural exports as demand for
food is expected to increase in China
as imports of commodities drop.
As a result Zambia’s ranking in
the World Bank’s “Doing Business”
report has declined from 91st globally
in 2015 to 97th in 2016.
Most important from a logistics
perspective is that it declined by 42
places in the “trading across borders”
category – from 110 to 152 globally.
It is not all doom and gloom,
however. Companies that are
committed to Zambia are taking
the downturn in their stride and are
diversifying where they see a gap or
offering value-added services.
One clearing agent based in
Kitwe, for example, has gone into the
business of supplying solar panels.
Another has started a limousine
service in Lusaka to take business
people to and from the airport.
Others are looking afresh at
markets in neighbouring countries
and the rest of the region.
Despite its challenges Zambia
is still one of the preferred
countries in which to do business
in Africa.
It is ranked sixth on the
continent – just two behind South
Africa (Mauritius is first).
And, as those who have been
in business know – the economy
moves in cycles, and it will start
growing again.
“When?” is the question
everyone is asking.
