"Within one month our revenues had jumped over 50%."

Trade in Zambia

 

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In 2010, the World Bank named Zambia one of the world’s fastest economically reformed countries. The Common Market for Eastern and Southern Africa (COMESA) is headquartered in the capital Lusaka. Zambia is one of the most highly urbanized countries in sub-Saharan Africa with 44% of the population concentrated in a few urban areas along the major transport corridors, while rural areas are sparsely populated. Unemployment and underemployment in urban areas are serious problems, while most rural Zambians are subsistence farmers. The population was estimated at 12,935,000 by the Zambian government in 2009. The population is concentrated mainly around Lusaka in the south and the Copper belt Province to the northwest.

Zambia ranked 117th out of 128 countries on the 2007 Global Competitiveness Index, which looks at factors that affect economic growth. Social indicators continue to decline, particularly in measurements of life expectancy at birth (about 40.9 years) and maternal mortality (830 per 100,000 pregnancies), as reported by Human Development Reports. The country’s rate of economic growth cannot support rapid population growth or the strain which HIV/AIDS-related issues place on the economy. The Zambian economy has historically been based on the copper mining industry. The Zambian government is pursuing an economic diversification program to reduce the economy’s reliance on the copper industry. This initiative seeks to exploit other components of Zambia’s rich resource base by promoting agriculture, tourism, gemstone mining, and hydro-power. Agriculture plays a very important part in Zambia’s economy providing many more jobs than the mining industry. Zambia was ranked the 127th safest investment destination in the world in the March 2011 Euromoney Country Risk rankings.

In 2003, exports of nonmetals increased by 25% and accounted for 38% of all export earnings, previously 35%. The Zambian government has recently been granting licenses to international resource companies to prospect for minerals such as nickel, tin, copper and uranium, as reported by Penny Shares Online. It is hoped that nickel will take over from copper as the country’s top metallic export. In 2009, Zambia has been badly hit by the world economic crisis, as reported by the Times. The Zambian market is still quite poor with an annual nominal GDP per capita of $1600, as measured by the IMF in 2011. Asa result, the country‚Äôs nominal GDP was a paltry $18.4 billion in 2011. There are, however, positive macroeconomic signs, rooted in reforms implemented in the early and mid-1990s. Zambia’s floating exchange rate and open capital markets have provided useful discipline on the government, while at the same time allowing continued diversification of Zambia’s export sector, growth in the tourist industry, and procurement of inputs for growing businesses. Some parts of the Copper Belt have experienced a significant revival as spin-off effects from the massive capital reinvestment are experienced. As a result, Zambia posted a healthy growth rate of 6.7% in 2011.

Overall, Zambia is still a promising market for businesses to trade in. The World Bank ranked it at 84th in its annual Ease of Doing Business indicator for 2012. A ranking which is higher than even some more developed countries. The same indicator ranked Zambia at 79th for Protecting Investors, 153rd for Trading Across Borders, and 85th for Enforcing Contracts. So while the overall market might still be small and poor, it is growing at a reasonably fast rate and their is still plenty of opportunity to take advantage of the market. The government continues to put in place, policies that are favorable to business investment.

 

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Author:Globial International Business Team

The Globial International Business Team researches, analyzes, and reports on all things related to global trade and business.

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