Investment opportunities in Zambia's expanding sectors: agriculture, fintech, and tourism, plus insights on FDI trends, policies, and business challenges
Zambia is an emerging market in Sub-Saharan Africa, experiencing steady economic growth fueled by its rich natural resources and strategic geographical location.
Investment opportunities in Zambia is not limited to mining, sectors such as agriculture, manufacturing, energy, and tourism have seen considerable expansion, making it an attractive destination for investment.
Moreover, the government’s commitment to economic reforms, infrastructure development, and investment-friendly policies has further enhanced the nation's appeal to global investors.
Why Invest in Zambia
- Zambia's GDP grew at an average of 5.1% annually from 2001 to 2007, with a growth rate of 5.83% recorded in 2023.
- As part of SADC and COMESA, Zambia provides access to a market of over 600 million people.
- Inflation in Zambia was reduced from 22.02% in 2021 to 10.88% in 2023
- Copper accounts for over 70% of Zambia's export earnings, with the country being a key producer of cobalt, gold, and 20% of the world's emeralds.
- Zambia has 20 national parks and 34 game management areas, featuring iconic attractions such as Victoria Falls and South Luangwa National Park.
- Zambia has a road network of approximately 67,671 km and railways that connect to major African seaports.
- The Lusaka Stock Exchange saw a 45% rise in market capitalization in 2007, showing strong investor confidence.
Investment Opportunities in Zambia
Zambia offers a diverse range of investment opportunities across multiple sectors. Here are some of the most promising areas for investment in the country:
1. Agriculture
Agriculture is a vital sector in Zambia, employing over half of the population, though its share of GDP in 2022 was 3.39%. The government is focused on enhancing agricultural productivity through investment in value addition, food processing, and agribusiness.
Crop Production
Zambia's agriculture primarily involves cash crops such as maize and soybeans. While agriculture's GDP share is modest, modern farming technologies can boost yields by up to 30%, enhancing profitability and export potential.
Food Market Growth
Zambia’s food market is expected to generate $4.29 billion in 2024, with the meat segment valued at $798.1 million. The market is projected to grow at a 9.64% CAGR from 2024 to 2029. Online sales are set to contribute 2.2% of total revenue by 2024, reflecting the rise of e-commerce in the food sector.
Per capita revenue in the food market is forecasted at $202.80 in 2024, with an average consumption of 79.08 kg per person. By 2029, the market volume is expected to reach 1,932 million kg, showing 3.1% volume growth in 2025.
Agro-Technology
Investments in agro-tech solutions, such as water management and mechanization, are critical to improving productivity and sustainability in Zambia’s agricultural sector.
2. Energy
Zambia's energy sector is abundant in natural resources, offering various opportunities for investment, particularly in renewable energy. The government’s focus on boosting energy capacity and diversifying sources makes this an attractive area for investors.
Solar Energy
With 2,000 to 3,000 hours of sunshine annually and a solar potential of 5.5 kWh/m²/day, Zambia is well-positioned for solar energy projects. The government aims to increase solar capacity to 600 MW by 2030, presenting opportunities in large-scale solar farms, off-grid solutions, and household systems, especially in rural areas.
Hydropower
Zambia's 6,000 MW hydropower potential is underdeveloped, with only 1,700MW currently in operation. Hydropower provides over 80% of the country’s electricity, with major projects like the Kariba Dam leading the sector. There is significant potential for further expansion to meet growing demand.
Alternative Energy Sources
Zambia is diversifying its energy mix through investments in biomass, wind, and geothermal energy.
Biomass energy, with a potential of 1192 MW, comes from agricultural and forestry residues. Wind energy has potential speeds of 3–6 m/s, suitable for small-scale farms, while geothermal sites could generate up to 200 MW.
3. Mining
Zambia's mining sector is renowned for copper, but the country also holds untapped reserves of other valuable minerals, offering vast investment opportunities.
Copper and Cobalt
Zambia is Africa's second-largest copper producer, with an annual output of around 800,000 metric tons. The country also has significant cobalt reserves, essential for renewable energy and electric vehicles.
With global demand for copper and cobalt rising, investments in extraction and processing technologies can yield high returns. Copper alone accounts for over 70% of Zambia's export earnings.
Precious Metals
Zambia's largely untapped gold, silver, and gemstone reserves present further exploration and development opportunities. The government is encouraging mining in these areas to diversify the sector beyond copper.
Value-Added Processing
Investing in local processing facilities, instead of exporting raw minerals, is a key growth area. The value-added processing sector is expected to grow significantly, offering job creation and increased revenue.
Establishing facilities for copper and cobalt processing will help Zambia capture more value from its resources, boosting economic stability and reducing reliance on raw exports.
4. Tourism
Zambia's diverse wildlife, natural landscapes, and iconic attractions make its tourism sector ripe for investment, particularly in eco-tourism, luxury accommodations, and adventure tourism.
Eco-Tourism
Zambia offers unparalleled wildlife experiences, with attractions like Victoria Falls and South Luangwa National Park. As eco-tourism grows, demand for sustainable lodges and conservation-focused tours is increasing.
The tourism sector contributes around 7% to Zambia’s GDP, with eco-tourism expected to expand, supporting local communities and conservation efforts.
High-End Safari Lodges
Luxury safari lodges, catering to affluent travelers, present significant investment opportunities. Zambia’s high-end lodges, featuring exclusive experiences such as walking safaris and private game drives, are projected to grow significantly. This segment attracts high-spending tourists looking for unique, low-impact travel experiences.
5. ICT: Digital Payment Solutions, Mobile Connectivity, and Fintech
Zambia's ICT sector is rapidly expanding due to increased mobile connectivity, smartphone adoption, and a young, tech-savvy population. Key opportunities include:
Digital Payment Solutions
The total transaction value in Zambia's digital payments market is projected to reach $5,775 million in 2024, highlighting the demand for innovative digital payment platforms.
Fintech
With many Zambians unbanked, fintech services like micro-lending and mobile wallets are on the rise. The Fintech Digital Assets market is projected to grow by 8.92% (2024-2028), resulting in a market volume of $257.4 million by 2028.
Mobile Connectivity
As of early 2023, there were 16.36 million active cellular mobile connections in Zambia, representing 80.6% of the total population. This indicates substantial market penetration, with significant growth potential in rural areas.
Foreign Direct Investment in Zambia
In recent years, Zambia has seen a positive trend in FDI inflows, driven by its rich natural resources, stable political environment, and supportive government policies.
According to UNCTAD's World Investment Report 2023, FDI flows into Zambia reached USD 116 million in 2022, a recovery from a negative inflow of USD 352 million in the previous year. However, this figure remains below the 2018-2020 average of USD 504.3 million.
At the end of 2022, the total stock of FDI in Zambia was valued at USD 15.2 billion, representing 53.5% of the country’s GDP. Key sectors attracting FDI include mining, agriculture, and manufacturing.
Major source countries for FDI in Zambia include
- South Africa
- China
- United Kingdom
- Canada
Key Foreign Investors
Several key foreign investors have established a significant presence in Zambia. Prominent companies include:
- First Quantum Minerals Ltd.: One of the largest mining companies operating in Zambia, First Quantum has made substantial investments in copper mining operations, particularly the Kansanshi mine, which is one of the largest copper mines in the world.
- Zambia Breweries Plc: A subsidiary of Anheuser-Busch InBev, Zambia Breweries is a leading beverage company in the country, producing various alcoholic and non-alcoholic beverages. Its investment has contributed to local employment and economic growth.
- ZTE Corporation: This Chinese telecommunications company has played a significant role in improving Zambia’s telecommunications infrastructure, contributing to the expansion of mobile network coverage and services.
Success Stories of Foreign Companies Thriving in Zambia
Several foreign companies have successfully navigated the Zambian market, demonstrating the potential for profitable investments:
- Shoprite Holdings: The South African retail giant has established a strong presence in Zambia, operating multiple supermarkets across the country. Shoprite's success is attributed to its ability to adapt to local consumer preferences and its commitment to sourcing local products.
- Cargill: This global agribusiness has invested significantly in Zambia’s agricultural sector, focusing on local grain production and processing. Cargill’s operations have not only provided jobs but have also enhanced food security in the region.
- Total Zambia: As a leading player in the oil and gas sector, Total has made substantial investments in fuel distribution and service stations, contributing to the country's energy sector development.
Doing Business in Zambia
According to the World Bank's Ease of Doing Business Index, Zambia has shown improvement in its ranking over the years, reflecting the government’s commitment to reforming the business environment.
The country ranks in the middle range among African nations, indicating potential for further growth and development.
Competitive Advantages:
- Natural Resources: Abundant resources, especially in mining and agriculture, provide a solid foundation for business opportunities.
- Strategic Location: Situated in the heart of Southern Africa, Zambia serves as a gateway to neighboring countries, facilitating trade and access to larger markets.
- Growing Middle Class: The rising income levels among Zambians create demand for various goods and services, providing businesses with a growing customer base.
- Investment Incentives: The government offers tax holidays and other incentives to attract foreign investment, particularly in key sectors like manufacturing, agriculture, and tourism.
Challenges Of Doing Business in Zambia
While Zambia presents promising business opportunities, several challenges can impede the ease of doing business:
Bureaucracy
Lengthy and complex bureaucratic processes often delay business registration and the acquisition of necessary permits. Navigating the regulatory landscape can be frustrating for investors, leading to increased costs and delays.
Infrastructure Gaps
Insufficient infrastructure, including poor road networks, limited power supply, and inadequate transportation systems, can hinder business operations and logistics, impacting overall efficiency.
Sector-Specific Hurdles:
- Agriculture: Limited access to financing, unpredictable weather conditions, and restricted market access can affect productivity and profitability.
- Mining: Regulatory changes and land rights disputes can pose significant risks to investors, creating uncertainty in the sector.
- Tourism: Safety concerns, limited marketing efforts, and inadequate services in the sector can deter tourists, affecting growth potential.
Business-Friendly Policies in Zambia
Zambia has made significant progress in creating a business-friendly environment to attract foreign direct investment (FDI). Key policies and initiatives include:
Legislative Reforms: The government has introduced reforms to support a private sector-friendly environment, ensuring policy consistency and establishing ministerial portfolios focused on business, innovation, and the green economy.
Investment, Trade, and Business Development Act, 2022: This act promotes economic growth by fostering trade, business development, and investment. It supports economic diversification through export growth and encourages joint ventures between local and foreign investors.
National Industrial Policy: The policy aims to transform Zambia from a producer and exporter of raw materials to a net exporter of value-added goods, driving industrialization and economic diversification.
Support for MSMEs: The government has revised the National Micro, Small, and Medium Enterprise (MSME) Policy to tackle challenges such as access to affordable finance and markets. The updated policy focuses on enhancing the role of MSMEs in economic development, job creation, and wealth generation.
Conclusion
Zambia's political stability, strategic location, and supportive regulatory framework make it well-positioned for sustained economic growth.
Investors are encouraged to explore the numerous opportunities available, leveraging their expertise and resources to contribute to Zambia's development while reaping the benefits of a promising market.
As Zambia continues to evolve, those who invest now can significantly shape the country's economic future.
FAQs on Investment Opportunities in Zambia
1. What are the key investment opportunities in Zambia?
Zambia offers a diverse range of investment opportunities across various sectors, including:
- Agriculture: There is significant potential for value addition, food processing, and agribusiness due to the country’s fertile land and favorable climate.
- Mining: Zambia is rich in minerals, particularly copper and cobalt, with opportunities for exploration and value-added processing.
- Energy: The country is focusing on renewable energy sources, including solar and hydroelectric power.
- Tourism: With stunning landscapes and wildlife, Zambia is ideal for eco-tourism, high-end safari lodges, and adventure tourism.
- Information and Communication Technology (ICT): Opportunities exist in digital payment solutions, mobile connectivity, and fintech.
- Real Estate: Urban development projects and commercial and residential real estate investments are on the rise.
2. How do I start a business in Zambia?
Starting a business in Zambia involves the following steps:
- Choose a Business Structure: Decide whether to register as a sole proprietorship, partnership, or company.
- Register Your Business: Obtain a Business Registration Certificate from the Patents and Companies Registration Agency (PACRA).
- Apply for Necessary Licenses and Permits: Depending on your business type, you may need additional licenses from relevant government bodies.
- Open a Bank Account: Set up a business bank account to manage your finances.
- Register for Taxes: Obtain a Tax Identification Number (TIN) from the Zambia Revenue Authority.
3. What is the legal framework for foreign investors in Zambia?
Zambia has a robust legal framework that protects foreign investments. Key aspects include:
- Investment Act: This act provides guidelines for foreign and local investors, offering incentives and protections.
- Zambia Development Agency (ZDA): The ZDA facilitates investment and offers support services, including advisory services for navigating legal requirements.
- Double Taxation Agreements: Zambia has signed agreements with several countries to avoid double taxation, encouraging foreign investment.
4. What are the taxation requirements for businesses in Zambia?
Businesses in Zambia are subject to various taxes, including:
- Corporate Income Tax: The standard corporate tax rate is 35%, but reduced rates apply in certain sectors.
- Value Added Tax (VAT): The VAT rate is currently 16% on most goods and services.
- Pay As You Earn (PAYE): Employers must withhold income tax from employees’ salaries.
It is advisable to consult with a local tax advisor to understand specific tax obligations based on your business structure and sector.
5. What support is available for investors in Zambia?
Zambia provides several support mechanisms for investors, including:
- Zambia Development Agency (ZDA): The ZDA offers information, guidance, and support for investors, including assistance with permits and licenses.
- Investment Promotion Agencies: Various agencies provide resources and networking opportunities to help investors connect with local businesses and stakeholders.
- Sector-specific Associations: Many industries have associations that offer support, resources, and advocacy for businesses operating within those sectors.
6. What challenges should I be aware of when investing in Zambia?
Investors may face certain challenges in Zambia, including:
- Bureaucracy: Navigating government processes can sometimes be slow and complicated, leading to delays in obtaining permits and licenses.
- Infrastructure Gaps: While improvements are ongoing, infrastructure challenges such as unreliable power supply and transportation can affect operations.
- Sector-specific Hurdles: Some industries may have unique regulatory requirements or market challenges that need to be addressed.
7. Is Zambia a safe place to invest?
Yes, Zambia is generally considered a safe place to invest. The country has a relatively low crime rate compared to other regions in Africa, and the government is committed to maintaining a stable environment for business operations. However, as with any investment, it is essential to conduct thorough due diligence and stay informed about the local context.
8. How can I conduct market research before investing?
Potential investors can conduct market research by:
- Engaging Local Consultants: Hiring local experts can provide valuable insights into market conditions, consumer behavior, and competitive landscapes.
- Visiting Trade Fairs and Exhibitions: These events are excellent opportunities to network, gather information, and assess market demand.
- Utilizing Government and NGO Reports: Various reports and publications from the Zambian government, international organizations, and NGOs can provide data on economic conditions and sector-specific trends.