Zambia is among the top African countries in which it is easier to do business, according to Greg Marchand, CEO of Gizmos Solutions, an IT consulting and engineering firm in Zambia. It is also expected to be one of the fastest growing countries in the world through 2015. For US firms, there is also the bonus of being able to trade in US dollars.
Zambia is a land-locked country with around 13 million people. Being land-locked presents challenges for supply chains, as it can be difficult and costly to get freight into the country. Since supply chains are a critical aspect of doing business, Marchand suggests using supply chains that have been developed by others. “Zambia was a colony of England and there’s still a lot of government, as well as economic ties. South Africa is a huge trading partner; China is a big trading partner; India is a big trading partner,” he says. “So, those supply chains have been more established. The more you shift between two locations, the more efficient you’re going to be. America doesn’t have a lot of trade with Africa right now and the majority of commerce between the United States and Africa is in the oil industry.”
The nature of Zambia’s geographic, but land-locked, location also presents a major opportunity, Marchand says, “We (Zambia) are actually surrounded by eight countries and we have a total of twelve borders to eight countries, which provides us with a unique opportunity to be a trade hub – for people to bring their products in and maybe add some value.”
Zambia is a member of the regional economic community – Southern Africa Development Community (SADC). Even though Zambia has 13 million people, it has access to a market size of over 250 million people in SADC.
Besides being a geographically significant hub, Zambia is endowed with abundant minerals like copper, land, and water. China has taken advantage of this abundance to meet its demand for minerals due to growth in sectors like manufacturing. This is indicative of its investment in SADC countries – the largest investments in 2009 were in the resource-rich countries of Democratic Republic of Congo (~$228 million) and Zambia (~$112 million) according to the Ministry of Commerce in China.
Marchand also notes that the capital city of Lusaka is considered prime real estate, “Lusaka has been recognized in a recent Citi report as being one of the best investment locations for land in the world. This report basically outlined where good investors are putting their money and Lusaka is number two on the list…”
For US businesses, Marchand points out several opportunities specifically suited to American companies in Zambia and other parts of Africa, “If I look at the IT infrastructure sector, which is [what] I am in, we are in the fastest growing telecommunications market in the world. We have a +20% compound growth rate in cell phone subscribers. Other major G8 countries are building the IT backbone in Africa and that’s going to be something that’s going to be huge down the road…In the power sector, America has not been as much involved as they have been in the oil and gas extractive industry. Thirty percent of Africa has great power and the next 70 percent is going to be built by somebody,” he says. “We’re kind of missing that boat of developing the next generation of people who are into power generation in Africa. There are some long play, uptake opportunities for American companies to do generation and distribution.”
Yet there are other sectors growing and attractive to American companies interested in entering Zambia. “There’s also a large opportunity in financial services – insurance as well as primary commercial banking,” Marchand says. “I would say an American firm might not want to come in and do retail, but definitely commercial trade, all sorts of commercial support finance; there are some very lucrative businesses in Africa and it’s what fuels the growth in the economy and there are ways to mitigate your risk.”
Zambia may present great opportunities, but there are still challenges and risks. Marchand advises, “…the first thing you can do is do your homework, do your research, figure out some key contacts, me being one of them; the reason I founded an American Chamber of Commerce in Zambia is to facilitate trade and investment with Zambia and the United States…The commercial services part of the US Embassy is also a good place to start. I know our economics and political officer (in Zambia) is extremely proactive.”
Also, play up the networks in your local area, which may connect you to Africa. For example, a significant number of Africans work and go to school outside of the continent, so university alumni organizations can prove to be useful in exploring business in Africa shares Marchand. The key is to find the network and contacts that can help you navigate and execute successfully in Africa.
Featured image is by Dr. Ferdinand Groeger.
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