The United Nations Conference on Trade and Development (UNCTDA) has recently released its World Investment Report for 2016, which covers the latest trends in foreign direct investment (FDI) around the World.
Zambia, together with other several countries in Sub-Saharan Africa (SSA), kept a good performance despite the fall in FDI in Africa of over 7% between 2014 and 2015.
Zambia ranked within the Top20 FDI destinations in Africa out of the 54 countries that compound the continent.
Angola tops the list of the best FDI destinations in Africa with USD8.7b of FDI inflows while Zambia ranks 17th with USD1.7billion.
However, the volume of FDI inflows to Zambia is down 48% from the volume recorded in 2014.
The slowing in FDI was mostly attributed to electricity shortages and uncertainties related to the mining tax regime which continued to constrain the Zambian mining sector.
Lower prices for copper (which accounts for over 80 per cent of Zambia’s exports), the collapse of the national currency and surging inflation also affected reinvested earnings.
UNCTDA indicates that despite the current commodity crisis and power shortages, Zambia has recorded in 2015 one of the highest FDI inflows in the last six years.
The Zambian government started in 2015 a liberalization of investment regimes and privatization of state-owned assets that provided a boost to FDI inflows and helped the country to achieve such performance.
Investments were concentrated in the extractive industry and related manufacturing activities that saw a jump on FDI from China, USA and Norway.
Zambia together with the Democratic Republic of Congo (DRC) and Sudan, were the main destination for Chinese FDI inflows while Angola and Equatorial Guinea received most of the inflows from USA and Norway.
According to Trading Economics, Zambian FDI inflows are expected to be above USD500m per quarter in 2016.
