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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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. Furthermore, 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 41.5 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 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 neighbouring states gives...

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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...

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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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Industry sales data from Renault showed that new vehicle sales in November 2014 declined 1.5% year-on-year (y-o-y) to 453 units, bringing sales for the first 11 months of 2014 to 4,973 units, a decrease of 1.7% y-o-y. Our forecasts for 2014 proved too optimistic in light of the poor sales in the past few months and as such we have downgraded our full-year sales estimate to 5,464 units, a contraction of 1.0%.

We believe auto sales in 2014 were affected by the depreciation in the Zambian kwacha in H114, which resulted in an increase in car prices for consumers given that the bulk of the cars sold in the local market are imported. However, we expect a recovery in the auto market in 2015 as economic growth accelerates.

We expect private consumption to be a key driver of growth in 2015 and 2016, forecasting 6.5% growth in both years. This will be boosted by good harvests in the agricultural sector and...

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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 retail...

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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: In Zambia's insurance sector, strong local currency growth of around 8-10% will be held back by currency weakness that will translate into growth of around 4-5% in USD terms. 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.

Gross insurance premiums in 2014 reached just USD284mn, following a significant weakening of the kwacha, and will grow in 2015 by 4.8% to USD298mn, again hurt by currency weakness. This rate of growth is expected to continue through to 2019, by which point total premiums will...

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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%...

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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. In this context, power generation will increase by 4.0% year-on-year (y-o-y) in 2015 to 13.3TWh, and rising to 20.3TWh in 2023. Meanwhile, power consumption will increase by 4.9% y-o-y in 2015 to 11.1TWh, rising to 16.9TWh by 2023.

With...

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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.

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Zambia Telecommunications

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BMI View: As operators' top line financial performance comes under intense downward pressure from regulatory and competitive factors, cost-cutting and efficiency improvement solutions will gain prominence in the mobile markets of Zambia and Zimbabwe. 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 telecoms 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 market in Zimbabwe contracted by 0.9% q-o-q in the same period.

  • By the end of September 2014, Zambia had a mobile penetration rate of 62%...

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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...

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