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

BMI View:

Core Views:

  • Despite low copper prices, we anticipate real GDP growth of 6.0% in Zambia in 2015, from an estimated 6.0% in 2014. Private and government consumption will remain the key drivers of growth, with resilient domestic demand helping to offset weaknesses in the export sector. Growth will also be supported by a stable inflationary environment.

  • Zambia's budget deficit will stand at 6.5% of GDP in 2015, significantly greater than the government's initial projection of 4.6%. Revenues will be hit by the reversal of a recent mining tax hike. Given that 2016 is an election year, this will result in capital, rather than recurrent, spending being reduced.

  • Zambia's current account balance will fall further into the red in 2015,...

To read the full article Register for Free or Login

Zambia Operational Risk Coverage (9)

Zambia Operational Risk

BMI View:

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).

...

To read the full article Register for Free or Login

Zambia Crime & Security

BMI View:

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...

To read the full article Register for Free or Login

Zambia Labour Market

BMI View:

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...

To read the full article Register for Free or Login

Zambia Logistics

BMI View:

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...

To read the full article Register for Free or Login

Zambia Trade & Investment

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, 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...

To read the full article Register for Free or Login

Zambia Industry Coverage (12)

Agribusiness

Zambia Agribusiness

BMI View:

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. Only in parts of Angola do we see food security being at risk, owing to the increase in fuel costs in 2014, which is expected to result in upward pressure on food prices and could negatively impact on food access, particularly in deficit producing areas. Over...

To read the full article Register for Free or Login

Autos

Zambia Autos

BMI View:

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...

To read the full article Register for Free or Login

Commercial Banking

Zambia Commercial Banking

BMI View:

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

To read the full article Register for Free or Login

Food & Drink

Zambia Food & Drink

BMI View:

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...

To read the full article Register for Free or Login

Infrastructure

Zambia Infrastructure

BMI View:

BMI View: We expect growth in Zambia's construction sector to remain positive over our ten-year forecast period to 2024, on the back of continued investment in transport and energy projects. However, growth will moderate over our forecast period as a symptom of overspending by the government over recent years and an uncertain environment for the crucial mining sector leading to lower capital expenditure.

On the one hand the government has moved to improve Zambia's construction sector, through tough action in the industry and wider economy to address corruption, which is likely to create a more transparent sector over the longer term. Following the inauguration of President Edgar Lungu, expectations are plans under this agenda are set to continue.

However,...

To read the full article Register for Free or Login

Insurance

Zambia Insurance

BMI View:

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...

To read the full article Register for Free or Login

Mining

Zambia Mining

BMI View:

BMI View : Zambia's mining industry growth will be boosted by the government's decision to slash mining royalties on open pit mining from 20.0% to 9.0%. However, mineral policy uncertainty will continue to limit the sector's growth outlook until the country's Presidential elections in 2016.

The Zambian government's decision to slash mining royalties on April 20 2015 bolsters the country's mining sector growth outlook. The new royalty tax will come into effect on July 1 2015 and will cut royalties on open pit mining from 20.0% to 9.0%. The downwards revision supports our view that the royalty tax would be unsustainable in its current form ( see: 'Tax Moderation On The Cards' January 9).

Although the recent downwards revision is positive news...

To read the full article Register for Free or Login

Pharmaceuticals & Healthcare

Zambia Pharmaceuticals & Healthcare

BMI View:

BMI View: The somewhat rebounded copper prices seen since the beginning of this year may prevent the deepening of the economic crisis in Zambia after the prices depreciated in 2014. This may prompt the government to stick with its commitment to strengthening policies of providing affordable and quality health care. In line with this, Zambia's health ministry has begun deploying specialised doctors to all provincial health facilities in a latest bid to bring primary healthcare services closer to communities. The move is part of the government's goal illustrated in the National Training Operative Plan and the PF manifesto to promote health. The government aims to set up specialised care units that are fully equipped and staffed in order to cut the number of patients referred overseas.

...

To read the full article Register for Free or Login

Power

Zambia Power

BMI View:

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...

To read the full article Register for Free or Login

Telecommunications

Zambia Telecommunications

BMI View:

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...

To read the full article Register for Free or Login

Zambia Telecommunications

BMI View:

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...

To read the full article Register for Free or Login

Tourism

Zambia Tourism

BMI View:

BMI View: The Zambia tourism report looks at a range of key indicators for this burgeoning market in Sub-Saharan Africa. Benefiting from extensive international travel links and strong relationships with key source markets, arrivals to Zambia are set to grow steadily throughout the forecast period, providing a valuable boost to the domestic economy and supporting investment in a range of segments including the hotel and accommodation market.

Zambia has plenty to offer potential tourists (and investors). The country is home to Victoria Falls (an attraction it shares with Zimbabwe) as well as extensive nature reserves, cultural sites and museums. It is also building a reputation as a top safari destination to rival more established...

To read the full article Register for Free or Login

Latest Zambia Articles

  • Growth prospects in the Zambian commercial beer market remain strong despit...

  • The sudden rise in US and European bond yields in May following a long, ste...

  • Zambia's budget deficit will stand at 6.5% of GDP in 2015, significantly gr...

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...