The Bank of Zambia has disclosed that mining has continued to receive the largest share of foreign direct investment (FDI) flow accounting for 53.9 percent in 2012.
The bank has however pointed out that government was working on diversification efforts to reduce dependence on mining.
Bank of Zambia Governor Michael Gondwe stated that the dominance of mining in the economy was also reflected in terms of FDI stocks at US$9,003.4 million in 2012 out of the total foreign direct investment of US$12,449.1 million followed by manufacturing at US $1,341.4 million.
Dr. Gondwe said government’s diversification effort in the economy was aimed at reducing dependence on mining with respect to growth, employment, revenue and exports.
He stressed that government has in the last 10 years been re-aligning its policies towards supporting private sector led growth which he said has been successful as reflected in an average economic growth of 6.1 percent over the period.
Dr. Gondwe however noted that poverty levels have remained high in rural areas while the number of poor people in urban areas was also growing.
He was speaking in Lusaka today at a forum to discuss the proposed 2014 national budget and its impact on the private sector.
The BoZ Governor said the Zambian economy was the most liberalized market in the world with vast opportunities for investment.
And responding to questions from the audience on the statutory instrument number 55, Dr. Gondwe explained that the SI 55 was meant for monitoring of the economy and to fight money laundering which became rampant especially among what he called briefcase business people’ who used to externalize huge sums of money from unknown sources.
Meanwhile, a Zambian entrepreneur, Priscilla Banda appealed to government to also recognize and support the informal sector that comprises of the small and medium enterprises (SMEs) instead of paying much attention to the mining and the other formal sectors.
Ms. Banda explained that the informal sector’s contribution to the economy was immense but required much support as it was bigger than the formal sector.
And American Chamber of Commerce in Zambia vice president Paul Kaluba urged business persons to join the chamber in order to enhance their trade with American and learn more business ideas.
Mr. Kaluba noted that the chamber was a good forum for Zambians in business to export goods to the American market.
ZANIS
With FDI of close to 55%, there should be ways of ensuring the mines provide tax equitably. Relevant authorities must tie the noose around the mines in the same manner formal workers are taxed. I wonder why such a big cash machine can be left to do as it pleases in this important area of tax. tax evasion and low tax returns is a serious offence!
Hang on a minute – the title and the content do not match.
Yes, Bwana Gondwe we know that even after 50 years of political independence, our economy and the infrastructure are still colonial – meant to externalize copper and leave the poor Zambian thinking we have the best economy in the world when in actual fact we are being raped senseless economically.
This is our legacy. I do not see any leaders who will change this scenario. Now where did I leave my bottle of cheap whiskey?
LOL!!!!!! LOLest. Sebana wikute
“The BoZ Governor said the Zambian economy was the most liberalized market in the world with vast opportunities for investment.”
Wow!!!
ABSOLUTELY UNTRUE.
Please, stop day-dreaming and face reality of State constant interference and flood of contradictory Statutory Instruments.
Talk of blowing own trumpet……… not bad on paper. With an above average FDI flow from the mining sector, one would expect this sector to contribute more to our revenue. Wish BOZ can give us the sector’s contribution in 2012 & the comparison with other countries that we rank first in most liberalised market. The observation from P. Banda on recognition & support of SMEs is remarkable. It’s an area govt must promote & eventually broaden it’s tax collection.
Most liberalized economy does not necessarily mean most advanced or growth Mr. Governor. On the contrary, we were better off with a less liberalized economy as a country. What mining companies are paying to the treasury is a joke. In fact, they should be contributing about 98% to it. Meanwhile, exactly is govt doing to grow other industries such as Agri and Tourism. Are there deliberate policies and efforts being done today so that these industries contribute 70% to the national treasury in 20 years?
And yes Priscilla is right. Govt needs to support small local businesses. Our economy will never grow if these industries don’t grow and contribute to the treasury. However, Govt is good and cracking down on local business and supporting foreign ones–e.g. what have they tried to do with HH?
I agree with the BOZ governor that Zambia is the most liberalised economy. However, I think this is an anomaly since even the most powerful economies in the world are not this open. I think its time to make some adjustments. The IMF and world bank cheated us that when we privatise everything our economy will boom but twenty years down the line we are worse-off.
Actually World Bank and IMF policies cherry-picked those sectors that could augment growth and talked them into the ground. Because we had gullible politicians, they got their way. Of course you can now see that with the difficulties in Europe and the rise of China, we are now seeing reverse advice coming through. Hence you have initiatives to restart the national airline and nonsense like that. There is more gullibility on the way. In the meantime the citizen is always the guinea pig at the end of a searing hot rod.
Tell that to the leader of the pastoralist-dominated party, UPND, Hichilema, Dr Gondwe, and hear his reaction!
Then there is no absolute liberation. Watching carefully and taking your positions in the world of comparative advantage is the way.
I think Gov. was being simple here because saying that it means there is no fiscal policy or monetary policy
Its also important that there is consistence and recheck of polices to ensure consistency and focus to other complementing policies.If such huge FDI is being recorded,then there is policy mismatch which policy makers will need to address to balance the capital and Financial account of the counry Zambia??
Lets relook at how this FDI affects and trickles to other scetors and see how the indicators are not the blanket GDP growth of 6 will aggregate.Working and developing the Financial sector will help cement and retain most of the value to the strenghting of the Kwacha.
Balancing Zambias capital and Financial Account will help to reposition.We all know the common equation lets follow the rule
CA=X-M=Y-(C+I+G) and then we can talk about the exchange and other things
Lets also look at how we manage the deficit and methods of financing the same reforming certain methods.It was interesting to read the bond auctioning advertised by BOZ in the daily mail of today giving chance and participation to Zambians on Luse But lets relook at the spreads on coupons and maturity and also the auctioning system Is it dutch auctioning Uk or German or Us and how that effects how much money Boz can effectively raise and save
Relooking at the GRZ debt portfolio will also be helpful to balance FDI accounts .
Reducing exposure to foreign banks and institution and overweighting supra and national debt accumulation will effectively back to back this FDI.Matching…
“UMULEMBWE WA CHIPUBA WAPWILILE MULI TUMFWEKO.”
THAT IS WHAT IS HAPPENING TO OUR ECONOMY. IT IS NOT BEING LIBERALISED. IT IS IN-ABILITY TO PUT IN CONTROL MEASURES AND NO CLEAR GUIDELINES AND FLIP-FLOPPING BY THOSE IN HIGH AUTHORITY.
CA=X-M=Y-(C+I+G) you can then further decompose this and align policy frame work to ensure you safely grow taking advantage of your strengths and weaknesses whilst balancing your policies in that direction whilst keeping tract of your gains over a period of time in key economic indicators in each sector
Getting it right is often the key to rebalancing the FDI to register growth in sectors
What has the liberalization of our mines brought? Misery and nothing else.
Interesting disclosures from the BoZ Governor! He is touting growth in FDI and encouraging local investment efforts yet all the financial institutions under BOZ supervision, maybe except Bank of China, are lending more to consumption than investment. In practice my research has shown that it is faster to borrow K 100,000 to buy a car than it is to borrow K 50,000 to expand your poultry farming project!
Further……as in the above finding the roads are getting more and more congested with motor traffic while smoke billowing from factory chimneys is reducing…..you get what am saying?
@Kapuli you are a great thinker and analyst. You should belong to the “EcoMun Center” a think and action tank institute am soon founding…..EcoMun Center derived from Einstein’s popular e=mc2.
BRING BACK WINDFALL TAX
Michael Gondwe, yes you are lamenting about mining being the backbone of the economy and, you also talk about diversifying the economy by tapping into manufacturing, which if properly planned can generate huge profits through meeting orders from abroad and also meeting orders from domestic retailers. However, manufacturing is a complex industry which needs to meet the labour supply-sides and, if the labour demand-sides are sporadic or do not exist, then your manufacturing proposal defeats its original goal. This means that the main bruising matter of unemployment still remains unresolved. Your above statement is very vague or may be it is an empty political speech not a statement of an economist. I will explain further and substantiate my argument below. Thank you.
Its like having a longterm view on economic policies and how that impacts on longterm lasting change in FDI resulting in positive changes in capital accounts and Financial accounts of Z .Analysis tariffs and treaties in “comesas and other on positive gains for Zambia from such
Institutionalising longterm policy plans avoiding “physical controls” in Capital and unhealthy flexing of tariffs and interest rates and other to artificially attract that.
lets remove the tendance also to run SI and create a policy environment predictable for firm and quality investments environmemnt removing event and sovereign risks that come along as may be preserved.
Above all rention and value creation….
Looking at the whole value chain as an externality affecting all sectors of that FDI.
Support services and other carefully planning in a similar model like an economic Zone fully fledged then employments will be created massively as an offshoot and not across as an extension
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We have been subjected to the diversification chorus from 1964. Can the song move on? We should have diversified by now