Business

Government makes strides in economic zones, but…

meetings. PRESIDENT Lungu unveiling the plaque at the malting plant for Zambian Breweries at the LS-MFEZ.

ESTHER MSETEKA, Lusaka
ZAMBIA’S central geographical location in the middle of Africa gives it great advantage to access important markets in central, eastern and southern Africa.

The country is also integrated within various free trade areas such as the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), which hold trade benefits between member countries.

Prime growth sectors for investment in Zambia include manufacturing, agriculture and agro-processing, tourism, energy, mining, livestock and fisheries.
Others are commercial buildings, transportation, media, telecommunication, infrastructure and human resource development.
And to ensure that Zambia utilises its land-linked advantage, Government introduced special industrial zones for both export and domestic-oriented industries.
The multi-facility economic zones (MFEZ) are designed to have well-equipped infrastructure in place to attract and facilitate for the establishment of world-class enterprises.
Currently, Zambia has about six zones or industrial parks and these are Chambeshi, Lusaka East, Lusaka South, Lumwana, Sub-Saharan Gemstones Exchange and Roma Park.
According to the Ministry of Commerce, Trade and Industry, the MFEZ programme comes under the auspices of the Triangle of Hope initiative, which was introduced to Zambia in 2005 by Japan, through the Japan International Cooperation Agency (JICA).
Out of the six MFEZs, five are privately-owned while the Lusaka South MFEZ is owned by Government, through the Industrial Development Corporation.
The LS-MFEZ was designed to encourage specialised industrial developments aimed at diversifying the economy and attracting new foreign and domestic direct investment.
In 2013, the zone was opened for investments and it started with a lot of vigil hoping to lure a lot of both local and foreign investors.
Minister of Commerce, Trade and Industry Margaret Mwanakatwe explained that Government will continue improving the investment and trade climate in the country through the implementation of various reforms aimed at reducing the cost of doing business.
Mrs Mwanakatwe pledged Government’s commitment in developing a private sector-led economy which contributes to wealth creation and poverty reduction.
“Government is cognisant of the fact that continuous policy improvements are required to strengthen the industrial sector in light of greater competitiveness and integration into the world economy,” she noted.
Mrs Mwanakatwe says Zambia offers huge investment opportunities not only in the manufacturing and service sectors, but also in energy, tourism, and agriculture and infrastructure development such as construction of roads, bridges, houses and railways, among others.
However, four years down the line, the LS-MFEZ has only managed to receive investment pledges worth US$1.5 billion, resulting in the actualisation of US$443.8 million to date.
As observed by LS-MFEZ acting managing director Mukela Lubasi, the number of expressions of interest to invest in the zone has reached over 200 from both local and foreign firms as at August 8, 2017.
This is out of which 36 applications have been approved with investment levels of US$1,500.9 million.
However, of the 36 applications that have been approved, six companies with investment worth US$72.7 million have withdrawn from investing in the zone due to various reasons such as inadequate funds to develop their projects.
Others are lack of proof on availability of finance, which have contributed to preventing some of the companies from investing at the MFEZ.
Ms Lubasi added that there are procedures that need to be followed when investing in the zones, for example, proof of financing because LS-MFEZ needs investors who have available funds to undertake particular projects.
Therefore, the total investment pledges less the US$72.7million withdrawn is now US$1,428.2 million.
“Nineteen companies have signed lease agreements worth US$443.8 million, eight companies are on site, undertaking construction activities worth US$272.9 million while four companies’ proposals worth US$33.3 million are currently being appraised,” she explained.
The zone has also facilitated for the creation of over 500 direct jobs and 1,800 indirect during the period under review.
Ms Lubasi says the construction of the LS-MFEZ, a 2,100-hectare area, is being done in five phases. However, due to some lapses on the part of the zone management in the past, the initiative plan was abandoned and this has led to investors been spread across the zone.
Nevertheless, the good news is that the zone has been resurveyed, plots have been numbered and the interim management has re-adopted the old way of allocating investors in the zone.
“The zone has phases, but along the way, they [past management] decided to move away from the stage development, so that has given us challenges as regards to services because in phase one, the water and sewer network was done and the roads where done,” Ms Lubasi added.
However, she refutes claims by some sectors of society that for one to invest in the zone, they should meet the investment threshold of US$500,000. The threshold was introduced to enable companies setting up base in the zone to benefit from incentives.
“We are open to both local and foreign investors, so this myth that we are only open to foreign investors is just what it is – a myth. MFEZ is open to anyone but to get incentives, they should have US$500,000 and above.
“Investors can come and set up base in the zones. But we have a list of requirements that we want people to present to us such as bankable projects,” Ms Lubasi explained.
In as much as the flow of investment in the zone is appreciated, the current numbers are not very impressive.
But what is derailing the pace at which investment is coming into the zone?
Is it the lack of a vigorous marketing campaign to scale up investment into the zones, or is it the need for continued policy improvements required to strength the industrial sector in the light of great competitiveness and integration into the world economy?
Whatever the reason, there is need for the Ministry of Commerce, Trade and Industry, Zambia Development Agency and LS-MFEZ to work more as a unit and not as separate entities in their quest to promote investment activities in the country.
For example, if there are trade activities taking place, whether local or international, the trio should co-ordinate and ensure every party attends such important meetings

 

 

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