Post date: Sep 18, 2012 4:43:51 PM
LUSAKA, ZAMBIA (REUTERS) - Japanese heavy duty construction machinery company, Hitachi is one of many foreign companies taking advantage of Zambia's favourable investment climate to do business.
Starting a business in Zambia has been made easier to boost commerce, as many foreign companies move in to invest mostly in the mining sector which is expected to help develop more government projects and create jobs.
Zambia has attracted huge foreign investment, mainly in mining, from emerging economies such as China, that want to exploit its vast copper deposits - mined mainly in the northern parts of the country - as well as other minerals such as uranium.
Hitachi Construction company President, Youji Akaike says about 15 million US dollars was invested in the Lusaka factory that now employs 100 people.
"Zambia is I would call very stable, very peaceful and Zambia is one of the best countries to invest in Africa," said Akaike.
Zambia's economy is expected to grow steadily despite uncertain copper prices, as construction and agriculture supports Africa's top producer of the metal, a Reuters poll recently found.
The survey of 10 economists showed the landlocked southern Africa nation's economy expanding 6.8 percent this year, slightly below the 6.9 percent forecast in a June poll, and then by 7.1 percent in 2013.
The country recently launched the One-Stop Shop and Business e-Registry in Lusaka, that's aimed at providing information for investors in the private sector as well as improve entry into the country's business environment.
Sri Mulyani Indrawathi, World bank Managing Director said the new service would help boost business in the country.
Zambia has been working with the World Bank to implement business regulatory reforms.
"It will ease and provide all the necessary information for the business community private sector initiative to get all necessary information and most importantly to finishing all the registration at one place in an easy process, transparent way and even and even in this way get help information of how to get potential demand for their industry products or services," she said.
Investment in mining is expected to benefit development of new mines and more government projects as well as create more jobs through infrastructure spending.
Yousuf Dodia is an economic analyst based in Lusaka.
"Investors are attracted because of the opportunities that are here, not just from raw materials, but it's a young economy. Everything that one wants to do whether its transport, whether its services whether its manufacturing, agriculture, there is still a lot of opportunity open to any investor coming into Zambia. The challenge is that we might have in terms of disinvestment is that you have certain policies that tend to fluctuate from one moment to another by the pronouncements that government officials make," said Dodia.
Analysts expect President Michael Sata to review contracts with foreign companies struck by his predecessor -- Rupiah Banda's administration, and even overhaul mining, trade and banking regulations.
Sata who took office last year has said that he welcomes foreign mining firms and that their investments would be safe but warns they need to improve conditions for their Zambian workforce.
Last week the government cancelled the lease of a railway line awarded to private company Railway Systems of Zambia, accusing it of mismanaging the company.
Zambia exports the bulk of its copper through the port of Durban in South Africa but most mining companies transport the metal by road because railway transport has been unreliable.
Zambia will invest 120 million US dollars to revamp the railway line.
"There are so many other things which have been done, mortgaged the country. For example as we are seated today, in 2003 to 2007, the MMD government surrendered through corrupt means Zambia Railways. Now that Zambia Railways is property that belongs to the people of Zambia," said President Sata.
The government has also taken over operations of telecommunications company, Zamtel after investigations concluded that the company had been illegally sold.
The sale of the Zambia National Commercial Bank (ZANACO) to Rabobank of the Netherlands is also under investigation.
Despite some investor nervousness, Sata is unlikely to go down the path of radical resource nationalism, analysts say.