HOLDINGS

Zambia 2017 | ECONOMY | B2B

In light of intervention by the IMF, companies will have to get creative to boost productivity in a period of belt-tightening. Though rising copper prices are expected to rise all boats in Zambia, firms mustn't overly depend on it.

Nitesh Patel
NITESH PATEL
Group CEO
Astro Holdings Limited
Mohamed El Sahili
MOHAMED EL SAHILI
CEO
The SF Holding Group

How are you developing your business, and how do you assess innovation levels in Zambia?

Nitesh Patel One of our most creative recent projects under consideration is a plastics scrap plant, which is a nod to our efforts to be more environmentally friendly, and to source products that are compliant with international standards from suppliers also working to lower energy emissions. The idea is that anyone who has scrap plastic can bring it to our plant, where we can break it up and use it as a raw material to produce certain kinds of commonplace products that do not need to be aesthetically attractive, just practical and robust. This is just one of the ways we seek to innovate in our businesses. In Zambia, more generally, while entrepreneurial spirit and innovation levels are tremendously enthusiastic, projects often remain paralyzed in the embryonic stages owing to a lack of proper planning, implementation, and execution. One of the major constraints for start-ups and other small businesses is a lack of support in terms of capital be it in the form of debt, equity, family capital, or crowd funding, and whether from the private sector or public sector.

Mohamed El Sahili In the FMCG sector, we have developed our operations to have more than 10 filling lines producing carbonated and non-carbonated drinks. When we bought Fairy Bottling in 2009, the company only produced one stock-keeping unit (SKU) of mineral water. Now, in addition to producing Aquasavana, the number one mineral water in Zambia, we also produce more than 12 SKUs of carbonated drinks. We designed our factory to have the only fully automated canning line in Zambia. In the healthcare sector, we are building a hospital under the company name Medland Health Services, and also produce pharmaceuticals, non-pharmaceuticals, and medical equipment under our subsidiary Pharmaland. In retail and leisure, we have two projects underway. We recently delivered the concrete phase on our pastry café, which will be the biggest in the region, and will soon begin construction of Villagio, the first shopping mall designed in the style of a village in Zambia.

What are your expectations for growth in the near future?

NP 2017 will be a difficult year for many businesses. The IMF's intervention in March is a cause for concern across the board, since it will mean tightened government spending. This adverse economic situation has only emphasized our need to diversify more in Zambia, specifically in agro-tourism and manufacturing. However, in the short term, we see copper prices picking up gradually and this being the main foreign currency earner, will somewhat give a boost to the economy. We understand there are new mines opening up in the DRC, which bodes well, since mines are multi-million dollar investments and do not appear overnight without a thorough analysis of the extractive sector and future price prospects. There is, however, the danger that once the copper prices start rising, the country will again fall into the trap of “grabbing low hanging fruit,” focusing its attention on the mining sector predominantly because of the great benefits it provides employees, local suppliers, revenue authorities, and other stakeholders. The zeal to diversify the economy to agro, tourism, energy, and manufacturing must continue together with the necessary infrastructure build-up.

MES We launched the Vision 2020 in January 2017 with the aim of catering and delivering services to everyone, right across the spectrum, in Zambia. Fairy Bottling produces quality products that are available at low cost. For example, we produce water in bottles as well as in cups, which are cheaper, with a lower grammage of plastic. Our energy drinks are not targeted, like traditional energy drinks or the middle class, but are priced much lower. We entered this market in 2016 and our energy drink has since been classified as the fastest-growing consumer drink in Zambia. In the healthcare sector, our services are for everyone: from VIPs to regular treatment. The medical services are of course the same, but the VIP experience is of a higher hospitality quality. Negotiations on our tenant mix for our mall are underway; we want partners who cater to the low, middle, and high class in order to create a balance. Around 80% of the space will be reserved for public use: gardens and recreational areas, with free Wi-Fi. All our projects will be launched between now and 2020. Work has begun on the electric and mechanical works at the hospital, though it will be a further 12-14 months before it can be opened. Construction of the Villagio begins in March, and will be operational within roughly one and a half years. Our patisserie will open in June or July 2017.