Zambia is arguably one of the most attractive investment destinations in Sub-Saharan Africa, endowed with abundant natural resources. Agriculture, tourism, large and small scale mining, hydro power and related value industries are some of the key components of Zambia's rich resource base.
A stable Westminister style democratically elected government which has coped fairly well since 1991, has been engaged, with the assistance of donors and other cooperating partners, in a broadly-based programme of economic reform aimed at restructuring the economy and developing the private sector.
This has resulted in a free currency exchange regime, a rapidly developing stock market and relentless pursuance of fiscal discipline. In addition, the government has developed a body of laws necessary in a rapid transition to a modern economy.
Such laws draw heavily on American and European traditions and therefore likely to be familiar to an international investor. The laws include the Securities Act , 1993, Privatisation Act, 1992, Companies Act, 1994 and the Zambia Revenue Authority Act, 1994.
Of overwhelming importance is a wide-ranging and bold privatisation programme involving the divesture of approximately 150 state owned enterprises some of which have been split and their operating units sold as independent enterprises.
This has increased the privatisation portfolio from the initial 150 to approximately 284 companies and units of which 260 have been transferred to the private sector as at September, 2005.
The responsibility for this performance rests with the Zambia Privatisation Agency (ZPA) formed in 1992 by an Act of Parliament as an autonomous Agency of the Government of Zambia. The function of the Agency is to plan, implement and control the privatisation of State Owned Enterprises in Zambia.
ADVANCE \d 4ZPA has a Board appointed by Parliament representing the diversity of Zambian society. The Board is led by the private sector with nine out of the twelve members nominated by various non-governmental institutions. ZPA's Board ensures that the ZPA's operations are at all times consistent with the Government' privatisation policy and legislation as provided for in the Privatisation Act.
The pace of privatisation in Zambia has indeed been impressive thanks to a strong resolve from the Zambian Government as well as to generous donor assistance.
A significant number of foreign investors have come to Zambia during and post the privatisation programme with South Africa, United Kingdom, China and India emerging as major sources of investment. Multinationals that have already invested in Zambia include, among others, Vedanta Resources in copper mining, Parmalat in dairy and food products, and Dunavant in the cotton industry.
Before the privatisation programme began, many State Owned Enterprises did not benefit from cash injections into capital projects and as result the factories became run down. This adversely affected production - especially in the mining sector. In many instances, the situation has been reversed and now the manufacturing sector boasts some modern factories with state of the art equipment.
Many of the companies which have invested in Zambia through privatisation, are already expanding at rates that they did not anticipate thanks to an enabling environment, provided by the Government, and the common market being established in Southern Africa.
Future privatisations will provide opportunities for major corporations to fully participate in trade sales as well as for emerging stock market funds managers to place their funds in floated companies on the Lusaka Stock Exchange.
Privatised companies that have since been listed on the Lusaka Stock Exchange are Chilanga Cement, Zambia Sugar Plc, Zambia Breweries, National Breweries, Rothmans of Pall Mall, BP Zambia Plc, Pamodzi Hotel and Metal Fabricators of Zambia Limited.
The ZPA is, among other State Owned Enterprises, currently working on the sale of 49% Government shareholding in the Zambia National Commercial Bank (ZNCB) plc, with management rights, and three bids have since been received, while nine tenders have been received from nine entities bidding for up to 100 % Government share holding in Maamba Collieries Limited (MCL).
Of the 51 Engineering Services Corporation (ESCO) properties that have been privatised, 49 have been sold to Zambians, while the ZPA is currently working on the sale of the Mbala and Kaputa units. Sale of the Lusaka property has been hindered by a court injunction.
There have been significant differences in the performance of privatised firms between their pre- and post-privatisation periods. These differences are in terms of improvements in operating efficiency or productivity, capital investment and output.
Copper production, for example, has increased from 300, 000 tonnes per annum to 500, 000 tonnes per annum and is set to reach 750, 000 tonnes per annum in three years.
In fact, the changes in firm ownership had a significant positive influence on firm turnover and profitability performance to the extent that , in absolute terms, privatised firms have out-performed comparable state-owned enterprises.
I welcome you to get in touch with the Zambia Privatisation Agency for further information on specific investment opportunities.
The Chief Executive
Officer,
Zambia Privatisation
Agency,
Privatisation
House,
Nasser Road,
P.O. Box 30819,
Lusaka, ZAMBIA.
Tel: 260-1-223858,
227735, 227791,
223859, 224147, 238303.
Fax : 260-1-225270
, 260-1-225390
E-mail: zpa@zpa.org.zm
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