Dear Members,
At the Chamber, the fourth quarter of 2022 was marked with exciting achievements and occasions The Chamber was presented with an invitation from the Public-Private Dialogue Forum (PPDF) to attend the 2023 strategic planning meeting for its technical working groups. The Chamber also had an opportunity to usher in a new advocacy committee that will oversee all advocacy operations.
The fourth quarter saw the Minister of Finance and National Planning unveil the 2023 National Budget This is the first budget after Zambia's attainment of the IMF Extended Credit Facility The Chamber would therefore wish to encourage the membership to leverage positive prospects from the budget.
We sincerely hope this policy review will be of importance to you, our members. Thank you once again for your continued support throughout the year
We wish you a Merry Christmas and a Prosperous 2023.
Chansa Mwila Chief Executive Officer
American
Chamber of Commerce in Zambia
More than half of the 18.4 million Zambian population are experiencing severe food insecurity. This has been attributed to high food prices and climatic shocks which have continued to affect agriculture thus calling for immediate humanitarian action to reduce the food gap, protect and reinforce livelihoods.
The food insecurity has been caused by various factors, some of which include: High rise in poverty which has been seen to nullify the rights to adequate food, housing, health, safe water, education and many others. Poverty and human rights such as the right to
food and social security are interrelated. The right to adequate food is an essential human right, yet most of Zambia’s population remains food insecure
Further, unsustainable fiscal policies have not achieved their aim to regulate economic stability, full employment, and the growth rate. This has led to a high rate of vulnerability among the Zambian population leading to food insecurity Unsustainable fiscal policies have also been seen as one of the major spillovers from the Covid 19 pandemic and the war between Russia and Ukraine.
Additionally, Prolonged dry seasons coupled with the negative climatic changes have occurred during the growth season of Zambia’s staple food. This has since
social security are interrelated. The right to adequate fo essential human right, yet most of Zambia’s population food insecure.
The impact of the Covid 19 pandemic has also affected the Country’s socioeconomic and food security more than any other infectious disease. It has exposed the fragility of the economy leading many to poverty This pandemic has had a severe impact on employment and income as many companies have been shut down, creating a major food crisis for people that cannot afford food. Additionally, the pandemic restrictions have also reduced livelihood opportunities
made it difficult for agricultural production in the country thus a majority of farmers being unable to produce crops. This season has sometimes been coupled with Pests making farming extremely difficult
Lastly, an increase in fuel prices worldwide has seen most of the population living below the poverty line. This is because goods and services have become extremely expensive.
These factors have led the World Bank in 2022 to reclassify Zambia as the lower middle income
category This reclassification was a result of sustained poor economic performance.
Some of the possible recommendations to curb food insecurity include The need to continually monitor and strengthen the Covid19 pandemic prevention measures as this will help prevent a reoccurrence of the pandemic. The need to promote climatic smart agricultural production even in poor weather conditions as this
will lead to the continuous production of food The need for Government to look at new methods aimed at improving Agricultural productivity. This can be done by partnering with farmers to look at ways to sustainably intensify the production of key crops The need for urgent action in highly affected areas to reduce food gaps and protect the livelihoods of the population and finally, the need to reduce food consumption gaps by improving food access to affected populations
The table below shows a summary of some of the problems discussed above and there recommendations
High Poverty Rise Urgent action in highly affected areas
Impact of Covid 19
Continuous monitoring of Covid 19 prevention measures
Prolonged Dry Season Climatic Smart Agricultural Production
BY Malindi Msoni & John Mututwa (ZIPAR)
Electric vehicles (EVs) are fast becoming mainstream around the world, particularly in leading economies like China, Europe, and the US. Just 10 years ago, only some 130,000 EVs were sold globally; that number has grown astronomically with sales rising to more than 6 million in 2021, representing nearly 9% of total cars sold globally. With more countries joining the global pledge to halt the sale of fossil fuel-driven vehicles by 2035, at the just-ended COP27, this number is set to grow The global pledge comes in the wake of the Zero Emission Vehicles Declaration that was launched at the COP26 in Glasgow, Scotland, in an effort to eliminate harmful emissions from transport, a leading contributor to global warming
While EVs are becoming the new normal in major global markets, the same cannot be said about developing countries, where the transition to emobility is not happening as quickly In most parts of the world, electric car sales still account for less than 2% of total car sales. In Africa, the market for EVs is still small with South Africa accounting for the largest share with approximately 300 units – of EVs sold annually The high price attached to EVs as well as the inadequate charging infrastructure and unpreparedness with respect to power supply, continue to limit the growth of electric car sales in emerging and developing countries. For example, the cost of EVs is sometimes 70-80% more than that of conventional alternatives, notably the internal combustion engine (ICE) cars which continue to dominate. This has created a major hurdle to the adoption of EVs in these countries This is also true for
Zambia where the number of registered electric vehicles is just slightly over 40.
Still, Zambia is looking to harness the potential of electric vehicles, particularly in light of the many benefits they offer. The obvious and often talked about the benefit of EVs is their potential to move countries towards net-zero emissions from transport The number of motor vehicles in Zambia has nearly doubled in the last 10 years on the back of rapid urbanization, a growing middle class, and the absence of a well-functioning public transport system; and big cities like Lusaka are already suffering the consequences of this growth in the form of traffic congestion, noise, poor air quality, and road traffic crushes. While switching to EVs will not solve all transport problems, their use can certainly improve the air quality for citizens However, for Zambia, where the cost of EVs especially four-wheelers remains high and beyond the reach of ordinary citizens, it will be some time before tangible benefits can be realized.
On the other hand, the business community in Zambia which typically has more financial leverage and access to financing can reap the benefits of EVs much sooner.
The catch? Owning an EV offers significant cost reductions; while they can be more expensive to buy, they face much lower running costs when compared to those faced by petrol and diesel-run vehicles This is particularly crucial for Zambian businesses that have no doubt borne the brunt of
recent fuel price hikes that have seen the pump prices for petrol and diesel going up by approximately 15% and 36%, respectively, since January 2022. And with fewer moving parts in EVs, there are fewer maintenance costs to worry about too. Therefore, transitioning to EVs can help firms keep running costs low by cushioning them from volatile and unpredictable fuel prices.
Further, transitioning to using EVs can give Zambian businesses an opportunity to get involved in innovative transport developments that promise to address some of th ld’ t i environmental challe concerns at the hear businesses can demo slowing down global w communities in which important at a time environmental sustain have but rather a ‘mu unlikely that Zambian term prioritize environ high-cost environment
Another real and tan can benefit from EVs battery manufacturing the world’s leading co their transition to EVs and cable assemblies markets in Europe, the to grow by about 30% rechargeable batteries cobalt, nickel, and ma g Zambia has a comparative advantage in production. This presents a significant opportunity for Zambian businesses to negotiate inclusion in leading EV battery and cable-assembly manufacturers’ market expansion strategies to meet the growing demand for batteries.
Even though Zambia already has the capacity to refine copper and cobalt on a large scale, Zambian businesses can in the medium-term leverage this capacity and process the raw materials further into battery-grade material for use in battery
manufacturing in international markets. In the long run, businesses can take advantage of existing economic zones for example the Lusaka South Multi-Facility Economic Zone to set up battery and cable industries. Further, existing companies like ZAMEFA and ZALCO that already make cables and batteries can be promoted to enter the EVs battery value chains.
So, can Zambian firms benefit from EVs? Absolutely, but only if some key challenges are addressed. As with most other developing countries, the cost of EV i th bi t d t nt to the adoption of usinesses looking to overnment needs to ves or subsidies to s, and accelerate EV ernment should be n the importation of ge that continues to is the lack of a With Zambia already tnerships (PPPs) to Government should sector (e.g., service alls, public car park as charging point ernment needs to oing business and nancing to encourage e chain of EV battery ce of a stable and ent is critical to o the EV value chain
In our view, EVs represent an economic opportunity for businesses to contribute to the EV-batteries value chain based on the existing mining and industrial structures. The Zambian mining industry can benefit from this boost in consumption by ramping up production and increasing employment. In the longer term as EVs are domesticated in Zambia, we expect a significant rearrangement of the international and national production systems which will lead to further long-term growth in the sector as well as the economy as a whole.
By Sharon Williams (PMRC)
The manufacturing sector continues to be a critical sector in Zambia’s economic discourse. Thus, like previous national d National Developmen sector as one of the recovery, coupled w sectors to realize the s the country for the manufacturing sector promoting strong bac other sectors such as catalysts for sustain enhanced support, ma to economic transform
On 30 th September 2 National Planning unveiled the 2023 Na “Stimulating Econom livelihoods”. This was attainment of an announced in Septem help resolve the debt to facilitate growth in t improved livelihoods for citizens. Generally, most manufacturing activities in Zambia are undertaken by the private sector with the Government playing the strategic role of an enabler This is an important partnership and it is important that emphasis has been laid on promoting the growth of the Agro-processing (food and beverages), textiles, and leather subsectors. Other growth enablers include secondary processing of metals, smelting, and refining of copper, fertilizer, cement, and explosive productions. The sector thus absorbs a significant outlay from other sectors such as agriculture while also feeding into other sectors such as mining and construction
In terms of trade direction, the manufacturing sector accounts for about 25% of the country’s total exports, of which COMESA and SADC countries (particularly the Democratic Republic of Congo and South Africa lead the chart of top destinations for Zambia’s manufactured goods Other significant export market destinations beyond Africa include China and Switzerland. While taking cognizance of the aforementioned significance of the manufacturing sector, the expended sectorial contributions to total exports and GDP which as of 2021 was at 9.1%, is inadequate to advance the transformation as
ngly, that government t to promoting multiFEZ) as a way of industrial and e industrial areas for c-oriented industries ntives). Further, the significance of small MEs) hence, it has r growth in both rural y to promote light As a consequence of South Multi-Facility attracted more than ledge investment of urther, operations at nt in Chilanga District city, the company will s of Compound D and ea per annum. This jobs for the local people, expected to increase to 600 when fully operational.
Nevertheless, for a continued growth outlook necessary to bring about the anticipated economic transformation, it is imperative that Government through the Industrial Development Corporation (IDC) continues its investment drive in regional competitiveness, for example, pineapple and mango processing plants in North Western and Eastern provinces
In furtherance of its objective to expand the manufacturing sector, it would be prudent for all
key role players to develop a master plan to drive the country’s aspirations in the green revolution with a specific emphasis on adding value to its natural resource endowments Further, to encourage more local participation in the manufacturing value chain, it will be necessary to not only lower the $50,000 threshold required to operate in an MFEZ but also quote the same in local currency to ring fence local
investors from exchange rate volatilities. Deliberate policies are therefore required to firm up a commitment from Government to support the sector through budget support to investments under the IDC as well as to the growth of SMEs that are venturing into manufacturing and processing of various products.
The table below highlights the 2023, 2022 and 2021 budget expenditure estimates by
As seen above, there has been an increase in all expenditure estimates by function except from the General Public Services which has seen a reduction from K84.6 billion in 2022 to K66.17 billion in 2023,this is mainly due to the IMF Extended Credit Facility which has reduced Government ‘s debt servicing from approximately 40 percent in 2022 to 18 percent in 2023.
functions of the Government. The currency is in Zambian Kwacha.
Source: Annual National Budget Speeches / PMRC
https://www.iea.org/commentaries/electric-cars-fend-off-supply-challenges-to-more-than-double-globalsales
https://blogs.worldbank.org/voices/developing-countries-e-mobility-revolution-closer-you-might-think Road Transport and Safety Agency (2022) 2021 Road Transport and Safety Status Report RTSA Lusaka, Zambia https://www.erb.org.zm/wp-content/uploads/monthlyRetailPumpPrices2022.pdf
https://www erb org zm/wp-content/uploads/PressStatements/2022-1031 PressStatement Petroleum Pump Prices Revised pdf
https://zipar.org.zm/
https://www mckinse ry-makers-canrespond-to-surging-d