CHAMBERS

Zambia 2017 | ECONOMY | B2B

As the new government moves to shore up trust in the private sector, the British and German chambers of commerce will be crucial to engaging significant sections of the business community.

John Paton
JOHN PATON
CEO
British Chamber of Commerce (BCC)
Johannes Kurt
JOHANNES KURT
Representative, Zambia Office
Southern African-German Chamber of Commerce and Industry (AHK)

How has your role within the business community developed since being established?

John Paton Since launching in February 2015, we have noticed enthusiasm and support on the part of both the private and public sectors. The British High Commission has also played a significant role in terms of access and facilitation. We have had an active 18 months since organizing our first event in April 2015, which was sponsored by Standard Chartered Bank. For example, we have held about 14 or 15 speaker events on topical and relevant themes related to trade and Zambia's operating environment. These are always popular, as they offer opportunities to network, as well as space to analyse the economic and business developments in Zambia. Our turnouts show there is a demand for such in-depth, up-to-date analysis; on average we have around 60-130 people in attendance. In general, we are a small operation, but we always look to stimulate the conversation. Our database comprises about 540 contacts, with about 10% of these as members, from across 450 to 480 companies.

Johannes Kurt The AHK is the largest bilateral chamber is Southern Africa, with 600 members in total, and an increase in membership of around 1.3% per year. Approximately 400 of our members are based in South Africa, 100 in Germany, mainly from the private sector, and the remaining 100 members are spread across the region with strongholds in Namibia and Mauritius. The AHK opened its office in Zambia in February 2016. It is a prerequisite for companies that want to become members to already be engaged in investment or trade relations between Africa and Germany. The German Chamber is a point of contact for German companies that are trying to access the Zambian market and who need initial contacts, advice, and market information. With companies that have been active in countries like South Africa, Mozambique, or Zambia for a longer period of time our role is more about interest representation and in some cases the mediation of conflicts. We have a code of ethics that companies sign when they join the chamber covering anti-corruption and money-laundering issues. We have 35 German companies based in Zambia, among them multinationals such as Bayer and BASF, but also engineering companies like JBG Gauff who are successful in the field of rural and urban infrastructure construction management.

Why are British companies interested in what the Zambia market can offer?

JP Zambia usually ranks within the top five or six best countries to invest in Sub-Saharan Africa, and that is partially because of its abundant resources such as copper and water reserves, its access to markets, being surrounded by eight countries, and because it is one of the safest and most peaceful countries in the region. The Zambian economy might not be the best in the world; however, we have seen sustained—and for the most part substantial—growth since the turn of the century. I hope the new government will continue to seek greater engagement with the private sector, since it cannot patch up the holes in the business environment single-handedly; it cannot continue to subsidize fuel and agricultural production, and so on. An outward-looking approach would encourage investors. According to almost all foreign investor perception reports, the pre-requirements to create the right investment climate in any given country include political stability, predictability, access to labour, both skilled and unskilled, reliable power and water, and the ability to remit dividends or foreign exchange, and these are defining factors of Zambia's business landscape.

JK Many companies are attracted to the political stability and vast potential of Zambia's resources. There has been talk of diversifying the economy away from traditional mining, and increasing activity in agriculture, agribusiness, manufacturing, food processing, and packaging. In addition, with more companies entering the market, it is a necessity to modernize in order to compete, especially with relation to South African players. The German industry not only has the technical solutions but also the training expertise to offer Zambia, and that has been a USP for many German technology providers. In contrast to this potential, however, the financial situation remains highly challenging in Zambia: the banking sector is fairly flat and interest rates are sometimes prohibitive. Therefore, we advise companies to come in with their own financing solutions to offer long-term payment options. That said, companies already active in other parts of Africa find adapting to the environment and network here relatively easy. Over the long term, Zambia has been one of the biggest success stories in Southern Africa, experiencing rapid growth from 2005-2015. Despite the economic downturn Zambia and the region have seen from mid-2015 onward, we see stable development and political calm here.