Zambia has large metals reserves and strong potential for growth in the mining industry in particular. Copper dominates, but the country boasts deposits of iron ore, coal, uranium and manganese. Economic policy has significantly improved over the last several years in Zambia, with key macroeconomic indicators such as inflation, real GDP growth and the current account balance strengthening substantially since 2003. Investment in key non-mining sectors, especially tourism, has contributed to the country’s high growth.

We keep our informed abreast of the latest market moves and political developments in Zambia, as part of our 'top-down' and 'bottom-up' perspective. Clients also benefit from in-depth analysis on 12 of Zambia’s most important industries. We provide interactive data and forecasting alongside detailed and risk-assessed analysis from our expert research teams. We aim to keep you one step ahead, so you find business in Zambia is a breeze.

Country Risk

Zambia Country Risk

Zambia Operational Risk Coverage (9)

Zambia Operational Risk

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BMI View: Rising inflows of foreign direct investment (FDI) are testament to the attractiveness of Zambia's business environment. Government policy is largely geared toward foreign participation, with low levels of trade protection, low tax rates, reduced levels of red tape and equal rights for foreign and domestic investors. This degree of openness also has drawbacks, with capital outflows undermining the country's balance of payments. Meanwhile, there is pressure on government finances and rising national debt, which places greater emphasis on foreign investment. Overall, Zambia performs well in the BMI Trade & Investment Market Risks Index, with a score of 49.0 out of 100 ranking sixth out of 44 states in Sub-Saharan Africa (SSA).

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Zambia Crime & Security

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Businesses and foreign workers in Zambia benefit from a safer environment than in most other Sub-Saharan African countries, with lower crime rates, a negligible threat from domestic or international terrorism and a secure strategic environment. Zambia therefore performs well overall in the Sub-Saharan Africa (SSA) region in the BMI Crime & Security Risks Index, with a score of 56.1 out of 100, placing seventh out of 44 states. Nevertheless, we highlight that crime remains an issue, particularly in urban areas, and corruption seriously hinders the response of security services.

Increasing regional integration and a lack of disputes with its neighbours mean that, despite Zambia's potentially vulnerable geographic location, its strategic international environment is among the most secure in the SSA region. The country's reputation as an advocate of indigenous and anti-apartheid movements in...

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Zambia Labour Market

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The workforce suffers from severe restrictions due to the lack of skills and formal work experience among the population, and the onerous burden of labour regulations. This limits the quality and options available for businesses looking to recruit Zambian labour, and imposes significant extra costs on employers. On the positive side, it is reasonably easy to bring in more highly skilled workers from abroad, which should reduce the need to recruit low-skilled Zambian labour. What's more, although we consider the quality and availability of education in Zambia to be poor by global standards, the country performs more moderately on a regional scale. Overall, Zambia scores lowly in the BMI Labour Market Risks Index, with 34.2 out of 100.

The lack of basic skills in the Zambian workforce is a primary labour market risk for investors in Zambia. Primary enrolment rates are rising, but dropout rates are high, which means the...

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Zambia Logistics

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BMI View:   As a landlocked state, Zambia requires an efficient supply chain to ensure doing business in the country is cost effective. This is not currently the case however, as shipping times and costs are very high, which erodes business margins and cuts profitability. Key threats include insufficient rail capacity, rising road congestion, high energy costs and poor availability. That said, the Zambian government is making progress on infrastructure development, and long terms prospects should yield improvements.

The Zambian economy is closely tied to copper mining, which drives economic performance and shapes development of the international supply chain. Copper production underpins the value and growth rate of international exports and incentivises development of the transport network, which have a key bearing on logistics risk in Zambia. However, falling copper global...

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Zambia Trade & Investment

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Rising inflows of foreign direct investment (FDI) are testament to the attractiveness of Zambia's business environment. Government policy is largely geared toward foreign participation, with low levels of trade protection, low tax rates, reduced levels of red tape, and equal rights for foreign and domestic investors. This degree of openness also has drawbacks, and capital outflows are undermining the country's balance of payments. Meanwhile, there is pressure on government finances and rising national debt, which places greater emphasis on foreign investment. Overall, Zambia performs well in the BMI Trade and Investment Market Risks Index, with a score of 49.4 out of 100 ranking the country eighth out of 44 states in Sub-Saharan Africa (SSA).

The absence of tariff and non-trade tariff barrier, a favourable tax regime, and low levels of government red tape, make Zambia an attractive place to invest and raise it...

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Zambia Industry Coverage (12)

Agribusiness

Zambia Agribusiness

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BMI View: We expect food security in South West Africa to improve over the short term, as we expect higher corn production from Zambia in 2014/15. Over the medium term, we see downside risks to sugar production in the region owing a global glut of the sweetener. Even with reduced production incentives, we expect Zambia to easily remain the region's largest corn producer and exporter, while other countries in the region will struggle to maintain production surpluses. We believe that the potential in the Angolan sugar sector due to recent investments coming on...

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Autos

Zambia Autos

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We expect the autos market to recover in 2015 and 2016, on the back of an acceleration in economic growth over the coming quarters. Private consumption will be a key growth driver, owing to the likelihood of good harvests in the agriculture sector. As such, we forecast private consumption growth of 6.5% in both 2015 and 2016. Some of the income generated by the agriculture sector could in turn be re-invested in new commercial vehicles, helping the autos sector to recover.

The growth of vehicle financing and leasing in Zambia means it is becoming possible for more new car brands, even from higher price points, to access the market. As Nissan Motor doubles its efforts to increase its presence in the country and Volkswagen arrives with a new showroom, the availability of various forms of financing will support growth in the nascent new car segment.

Some carmakers feel that...

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Commercial Banking

Zambia Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

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Food & Drink

Zambia Food & Drink

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BMI View: We maintain an optimistic outlook for the country's food and drink industry over our forecast period. With expectations for strong economic growth, a favourable demographic profile and a gradually emerging middle class, Zambia remains one of the most attractive investment destinations in the region. That said, short-term challenges remain, including continued pressures on an already ailing Zambian kwacha and the prospect of industrial unrest within the public sector workforce. With the World Bank expecting little, if any, improvement in the global commodities market through much of 2015, this will also continue to weigh on the Zambian economy.

Key Forecasts

  • Total food consumption growth (local currency) in 2015: 9.6%; compound annual growth rate (CAGR), 2014 to 2019: 10.0%

  • Mass grocery...

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Infrastructure

Zambia Infrastructure

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BMI View: Our outlook for 2015 indicates continued stable growth of the Zambian economy of 6-7% as a whole and a strong growth of about 15% for the infrastructure and construction sector. Long-term trends depict a similar stable growth as anti-corruption projects and development agendas continue to improve overall conditions in the country. Crucial for the success of these policies will be an improved revenue flow and funds entering the country.

The construction sector is being targeted under the broader reform agenda of the Patriotic Front government, and while substantial progress has been made, there is still much room for improvement. Change has been particularly evident in the construction sector, including management changes at Zesco, the road development agency, a freeze on construction to ensure proper permitting processes and the seizure...

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Insurance

Zambia Insurance

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BMI View: Motor and property lines will continue to dominate, equating to over 40% of all premiums in the industry, and around two-thirds of total non-life premiums. The industry, despite growth and strong regulation, is small even by regional standards, with per capita premiums of less than USD20.

A weakness of the life insurance sector is the lack of competition. Over 80% of gross premiums in 2013 were written by a core of three leading insurers: African Life, ZSIC and Madison. Just four other insurers were active in 2013, and, at the time of writing, no further entrants have offered a challenge to this entrenched dominance. This lack of competition is liable to starve the market of the kind of innovation it needs to capture the demands of lower-income customers. Positively, however, foreign...

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Mining

Zambia Mining

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BMI View : Miner's operating in Zambia will threaten to deter mining investment and shelve expansion projects, due to the country's deteriorating regulatory environment. Copper will be the key driver of growth in Zambia's mining sector, while coal output growth will contribute modestly over the coming years.

Copper To Remain Key Growth Factor
Zambia - Mining Industry Value & % GDP

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Pharmaceuticals & Healthcare

Zambia Pharmaceuticals & Healthcare

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BMI View: The newly-elected government has already made some healthcare promises to the people of Zambia, such as its pledge to ensure the creation of 650 health clinics. However, there remains much political and economic uncertainty in the country, with President Edgar Lungu having only recently been elected and facing an economic crisis following the fall in copper prices since the start of the year. Improving healthcare provision and mortality statistics are therefore unlikely to be the government's main priority in the short- to medium-term.

Headline Expenditure Projections

  • Pharmaceuticals: ZMK1,292bn (USD210mn) in 2014 to ZMK1,456bn (USD228mn) in 2015; +12.7% in local...

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Power

Zambia Power

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BMI View: The outlook for Zambia's power sector is generally positive. After decades of underinvestment by the Zambia Electricity Supply Corporation (ZESCO) the government has responded to the demands of the mining and manufacturing sectors to galvanize the development of new generating capacity. A number of coal-fired and hydropower stations are under development and close to completion, sufficient to cover Zambia's needs and allow for significant volumes of exports. Consequently, we expect power generation to increase by 4.0% year-on-year (y-o-y) in 2015 to 13.3TWh, rising to 20.5TWh in 2024. Meanwhile, power...

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Telecommunications

Zambia Telecommunications

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BMI View : BMI's Q215 Southern Africa report analyses the latest industry, regulatory and macroeconomic developments in the telecoms markets in Angola, Botswana, Mozambique, Mauritius and Namibia. It also contains our estimate of the market data relating to the end of 2014 and an update of our five-year forecasts to 2019 for the mobile, fixed-line and internet sectors.

Key...

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Zambia Telecommunications

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BMI View: As operators' top line financial performance comes under intense pressure from regulatory and competitive factors, cost-cutting and efficiency improvement solutions will become increasingly important in Zambia and Zimbabwe's mobile markets. Zambia's two biggest mobile operators have outsourced the management of their tower assets to a third-party company, while we expect Zimbabwe's operators to give serious consideration to the regulator's call for infrastructure sharing based on an open access model.

Key data

  • The mobile market in Zambia grew by 2.5% quarter-on-quarter (q-o-q) in Q314 following three consecutive quarters of contraction, while the Zimbabwean market contracted by 0.9% q-o-q.

  • By the end of September 2014 Zambia had a mobile penetration rate...

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Tourism

Zambia Tourism

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BMI View: Zambia's tourism industry offers substantial opportunities for development. Visitor numbers are increasing steadily, and the country also has a large outbound tourism market, which is dominated by regional travel. Future growth may be hampered, however, by the country's underdeveloped transport and accommodation infrastructure, with few international air travel connections and limited hotel options.

Zambia's tourism market is more developed than many others in the region, though it continues to linger far behind regional powerhouse South Africa. The country has no shortage of attractions, being home to Victoria Falls, a UNESCO World Heritage Site (as well as another seven potential World Heritage Sites...

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Latest Zambia Articles

Latest Zambia Blogs

  • Below is a selection of key financial market stories published in Business ...

  • We suggested in mid-June that short-term interest rate futures had gotten a...

  • The buzz around East African geothermal energy has been increasing in recen...

Latest Zambia Podcasts

  • Huge media attention and investment has made Sub-Saharan Africa's tele...

  • Africa's telecommunications sector has grown by leaps and bounds in re...

  • Despite another tough year for the global mining sector, BMI expects p...