Import-Export Newsletter

Economic Outlook – Zambia

1. 1. Real GDP of US$19bn in 2020, (against continental GDP of US$2.6trn; and Global GDP of US$84trn);
2. 1. Expected rebound from 2.8%, 2020 to a projected growth of 3.3%, 2021 (against Sub-Saharan Africa’s projected growth of 3.4%; and Global projection of 5.9%);
3. 2. Population, 2021 (Est) – 19.1mn (against Africa’s population of 1.3bn; and Global population of 7.9bn)
4. 3. Copper is main-stay of economy trading at US$9,194 as at end of Q3, and US$9,512.15 as at 03/12/2022;
5. 4. Zambia is undergoing macro-economic reforms, and is poised for a restructuring that is expected to result in overall growth factoring the population growth of 2.8%, and will be sufficient enough to impact the general poverty levels in the country.

Sources: World Bank; International Monetary Fund; United Nations; and the Ministry of Finance, of the Republic of Zambia

Overview: Trade Structures/Solutions

Trade Partners – Exports: Switzerland; China; Singapore; and the Democratic Republic of Congo

Trade Partners – Imports: South-Africa; China; United Arab Emirates; India; and Japan.

Total Exports: US$7.8bn; mainly attributed to Copper, Cobalt, Emeralds, and Cotton.

Total Imports: US$5.3bn mainly attributed to petroleum products, agricultural, pharmaceuticals

With the macro-economic objectives, policies and strategies of the new Government, certain deliberate steps as aligned to the 2022 National Budget of ZMW172,987,077,535.00 (US$9,610,393,196.39) are being taken aimed at driving growth in the following four thematic areas;

1. 1. Economic transformation and job creation
2. 2. Human and Social Development
3. 3. Environmental Sustainability; and
4. 4. Good Governance environment
5.  

These deliberate objectives and strategies present trade opportunities to the banking sub-sector. In light of this UBA has identified key sectors of priority to play in like Health; Energy; Manufacturing; and Agriculture, among others. UBA will play in these sectors, and provide support through its vanilla suite of trade products like Import LCs; Export LCs; Guarantees; and Trade Loans in some cases.  Specifics of these opportunities are as follows;

Energy: Importation of US$1bn+ worth of petroleum products like Low Sulphur Gasoil(LSG-Diesel), and Petrol, Jet A1; Liquefied Petroleum Gas, among others. The Government’s intent is on deliberate support to local entities so that they also play in the supply of refined products.  

Agriculture: The Sector through the Farmer Input Support Programme has a budget allocation of ZMW5,372,670,459.00 (US$298,481,692.17) representing 3% of the Total Budget. The Ministry of Finance being the Treasury arranges Letters of Credit for the benefit of suppliers to facilitate importation of farming-related inputs like fertiliser.

Health: The Sector has a budget allocation of ZMW13,911,599,575.00 (US$772,866,643.06) representing 8% of the Total Budget. A considerable portion of this will be towards the procurement of medicines and medical supplies.

Construction: The Sector has a budget allocation of ZMW6,100,000,000.00 (US$338,888,888.89) representing 4% of the Total Budget. In addition to this, the Government intends to enter into Public-Private-Partnerships (PPPs) agreements in a bid to grow the economy through Infrastructure Development, without straining the Treasury, considering that currently there is a debt of ZMW14bn attributed to contractors.

Manufacturing: Government intends to deliberately provide support to the sector to increase output and encourage new entrants through facilitation of trade using the platform the Africa Continental Free Trade Area provides. Additionally, the Government also intends to support manufacturers so that local products are competitive on the international markets.

Summary

With some of the Government’s key macro-economic objectives being to attain a real GDP growth of 3.5%; reduce inflation to single digit; increase domestic revenue to not less than 21% of GDP; and reduce domestic borrowing to no more than 5.2% of GDP, the country is poised to record steady growth in production. This has also been coupled with the fact that Zambia’s exports are mainly Copper; Cobalt; Emeralds; and Cotton, hence the need to diversify as well.

This will invariably bring about the need for more trade with not only neighbouring countries but Africa as a whole., The Government of the Republic of Zambia is already committed to boosting trade, as evidenced by the talks/engagements the Republican President, and his team are having with other countries, as well as the regional, and Continental trade bodies.

This approach will result into a much broader base of trade partners outside of the traditional ones like Switzerland, China, Democratic Republic of Congo, Singapore, United Arab Emirates, India, and South-Africa, thereby creating trade opportunities for businesses. 

As local and international players in the respective sectors tap into these opportunities, UBA Zambia is poised to support your every need.

At UBA we are well-positioned to trade and transactional banking support, cutting across Africa, and the World at large through our robust Structured Trade Finance, and vanilla Products like Letters of Credit; Trade loans; Bank Guarantees; and other Working Capital solutions. Our offering also includes FX/Treasury services, robust digital payment solutions, and remittances.