Business Live cited Mr Chisha Folotiya chairman of Laurence Paul Investment Services as saying that the Zambian government aims to diversify its economy away from its dependence on copper by exploiting its vast hydroelectric and agricultural resources.
Mr Folotiya said that “Faced with abundant land and water resources and rising global food prices the Zambian government has decided to focus on agriculture and agribusiness among other target sectors, for economic diversification and poverty alleviation.
Zambia has 3,35 million hectares of arable land and 40% of Southern Africa’s fresh water resources so after decades of neglect agriculture is a priority for the government. This was reflected in significant infrastructure development for prominent farming areas earmarked under recent national budgets.
The fertilizer support input program extended to reach a larger portion of population which has resulted in bumper maize harvests with Zambia now exporting to Zimbabwe among other countries.
The new emphasis on agriculture has attracted large foreign and local investments in the agribusiness sector with Zambeef for example listing on the London AIM market while UK firm Chayton Africa recently bought 20000 hectares and will invest USD 85 million to produce maize, wheat and soya beans.
To improve service delivery, the government has split the provinces into smaller regions through a decentralization drive. As new provincial and district capitals are named, infrastructure and housing will be developed. In addition to its focus on agriculture, the government is boosting its investment in power generation to alleviate current shortages and amass exportable surpluses for the rest of the region.
This will result in two new hydro electric plants, at Itezhi Tezh and Batoka Gorge while two new coal fired stations are due to be developed at the Maamba and Sinazongwe collieries.
The International Monetary Fund expected Zambia’s gross domestic product growth rate to rise to 7,7% in 2012 from 6,5% in 2011 the latest in a number of projections for South Africa’s neighbors forecasting higher growth this year. The higher growth in 2012 is in contrast to most countries GDP growth rates in 2012 relative to 2011.
Despite the favorable macroeconomic results, there is an urgent need to re orient policies to ensure that economic growth and macroeconomic stability are accompanied by strong employment growth and poverty reduction. Looking forward, it will be important for the government to implement policies to diversify the economy and ensure that growth is more inclusive.
The IMF enumerated key areas for improvement which included tax policy, tax administration, sound public financial management to create fiscal space for increased infrastructure spending and technical capacity to efficiently administer a larger capital budget.
Maize marketing, pricing policies and the development of a broad-based reform strategy for the agricultural sector was another area that required attention. The IMF also suggested increasing access to financial services by small and medium enterprises without jeopardizing financial sector stability.
Finally, the IMF called for the removal of incentives for the proliferation of informal business and employment arrangements. The United Nations World Investment Report 2011 reported that foreign direct investment flows into Zimbabwe were only USD 105 million in 2010 while neighboring Zambia attracted almost ten times that amount at USD 1,04