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FInance & Economy

An outward-facing economy

Zambia’s economy has returned to the path of strong growth after the country was forced to negotiate some tricky financial curves during 2015 and 2016. In fact, the end result has been greater international respect for Zambia’s economic management capacity, exemplified by Standard & Poor’s decision to change its country outlook from negative to stable in August 2017. The ratings agency Moody’s has recently followed suit.

With the combined impact of a copper price slump, low rainfall causing power shortages and a surge in inflation, which was successfully brought under control, Zambia closed 2016 with respectable annual GDP growth of 3.6 per cent, according to the World Bank, with an improved figure expected for the close of 2017. Looking ahead, favourable winds are blowing in the form of higher copper prices and the first fruits of Zambia’s investment in diversifying energy sources and better infrastructure.

In such a scenario of hope, Zambia’s vision of becoming a middle-income country by 2030 returns to the horizon of possibilities.

Sources: UNCTAD, WITS

“In 2017 we have turned the corner, and we can only grow faster in 2018,” says former finance minister Felix Mutati, identifying Zambia’s four key challenges as bringing public debt under control, guaranteeing a cheap power supply, boosting competitiveness, and economic diversification. “While the strength in the mining sector can continue to grow, we need to use the opportunity of that growth to enhance agriculture, industrialisation and tourism.” Mutati became Minister of Works and Supply after a February 14 cabinet reshuffle.

Bank of Zambia (Photo: Bank of Zambia)

Zambia’s authorities are working hard to improve conditions for investment inflows.  Margaret Mwanakatwe, former minister of commerce, trade and industry, and now minister of finance, highlights the creation of the Zambia Development Agency, Multi-Facility Economic Zones (MFEZs), new industrial parks “and the promotion of value-chain programmes countrywide”, as concrete policy steps taken to boost Zambia’s business fabric.

“Most of the portfolio investors – the ones buying government bonds and government securities – are UK investors who have confidence in the market because they do a risk profile and say that with a stable exchange rate and an interest rate to their taste, they are better off taking a chance on Zambia,” says Mr Mutati, adding: “I say: ‘Don’t worry about Brexit, come and enter Zambia’.”

“In 2017 we have turned the corner, and we can only grow faster in 2018”

Felix Mutati

Former Finance Minister
CASHLESS

Marching towards a cashless society

More Zambians will be able to join the country’s economic transformation by using mobile banking on their phones

The majority of Zambians live in a rural environment, where mobile technology constitutes a revolution in terms of how they can engage with the rest of society. One key breakthrough is the increasing use of mobile payments, heralding a future in which all transactions will take place without any need for time-consuming journeys to bank branches.

“Over time this will become a cashless society – there’s no doubt about it”

Henk G Mulder

CEO, Zanaco

Zambia’s authorities are working hard to improve conditions for investment inflows.  Margaret Mwanakatwe, former minister of commerce, trade and industry, and now minister of finance, highlights the creation of the Zambia Development Agency, Multi-Facility Economic Zones (MFEZs), new industrial parks “and the promotion of value-chain programmes countrywide”, as concrete policy steps taken to boost Zambia’s business fabric.

“Most of the portfolio investors – the ones buying government bonds and government securities – are UK investors who have confidence in the market because they do a risk profile and say that with a stable exchange rate and an interest rate to their taste, they are better off taking a chance on Zambia,” says Mr Mutati, adding: “I say: ‘Don’t worry about Brexit, come and enter Zambia’.”

Photo: SHUTTERSTOCK