Zambia Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

EU countries are not among Zambia’s main import or export trade partners. From the EU’s point of view, Zambia is a less important market. From the EU, Zambia mainly imports engineering products, means of transport, medicines, fertilizers, chemicals, electrical appliances and electronics, and to a lesser extent also food. EU countries, on the other hand, import copper in various stages of processing, precious stones, tobacco, leather, cut flowers and food. The volume of imports into the EU from Zambia and exports from the EU to Zambia has been more or less equal in recent years (ie the balance is close to zero on average).

2017 2018 2019 2020 2021
Exports from the EU (million EUR) 325,1 352,1 421,6 274,9 304,3
Import from EU (thousand. EUR) 346,5 406,5 369,4 244,7 327,3
Balance in the EU (thousand. EUR) 21,3 54,4 -52,2 -30,2 23

Source: European Commission

Trade relations with the Czech Republic

Imports from Zambia to the Czech Republic have been minimal for a long time and are mostly made up of agricultural commodities, or products of the mining industry (the main items are ferroalloys, copper, cut flowers, coffee, building stone, precious stones). Exports from the Czech Republic to Zambia, which have also been low for a long time, are mainly driven by engineering products (electrical components, chips, machine parts). In the last few years, one of the largest export items from the Czech Republic has been feed for farm animals.

2017 2018 2019 2020 2021
Export from the Czech Republic (million CZK) 41,5 79,2 118,9 62,1 38,4
Import to the Czech Republic (million CZK) 4,5 4,0 0,6 0,7 5,3
Balance with the Czech Republic (million CZK) -36,9 -75,2 -118,2 -60,6 -26,6

Source: businesscarriers.com

Trade relations with countries outside the EU

Among importers to Zambia, South Africa dominates with almost a third of total imports, followed by China, India and the United Arab Emirates. The main importers of goods from Zambia are Switzerland (copper), China, the Democratic Republic of the Congo, South Africa and other countries in the southern African region. Zambia’s exports mainly consist of copper, or other metal raw materials, and agricultural products. Recently, Zambia has benefited from record high copper prices on world markets, which has been matched by a growing trade surplus.

2017 2018 2019 2020 2021
Export to countries outside the EU (million EUR) 6 658,2 7 322,8 5 737,5 6 543,0 8 662,4
Import from non-EU countries (million EUR) 5 820,5 6 831,7 5 157,1 3 824,2 4 141,7
Balance with non-EU countries (million EUR) 837,7 491,1 580,4 2 718,8 4 520,6

Source: EIU, Eurostat

Foreign direct investment

Most of the volume of foreign direct investment in Zambia is represented by investments in the mining sector. The main foreign investors here are Canada, Australia, Great Britain, China and the USA. A specific area is the construction of physical infrastructure projects (road network, bridges, airports, etc.), the vast majority of which have been implemented by Chinese entities in recent years. FDI inflows into Zambia in 2020 were US$234 million and the country’s FDI stock was US$19,368 million in 2020, according to UNCTAD data. According to data from the Central Bank of Zambia, the largest investments in 2019 were in the mining sector ($13,943 million), manufacturing ($3,574 million), trade ($895 million), banking ($804 million), energy ( USD 436 million) and agriculture (USD 403 million). The largest investors were Canada (4,854 million USD), Switzerland (2,780 million USD – but it sold its largest investment in the country to the state in 2021), Australia (USD 2,081 million), China (USD 1,834 million), the Netherlands (USD 1,690 million) and Great Britain (USD 1,231 million). USD). Generally speaking, foreign entities can invest in Zambia in all economic sectors. Among the main constraints is access to land due to its complicated status – traditional authorities (local chiefs) still hold a significant position in this respect. Disadvantages are unreliable electricity supplies, bureaucracy, long and costly permitting procedures, and reservations in the transparency and uniformity of the application of legal regulations and the protection of property rights and enforcement of contracts. In the latest edition of the World Bank’s Doing Business Index for 2020, Zambia was ranked 85th out of 190 countries. It achieved a relatively good score in the criteria of access to credit and payment of taxes,

No Czech FDI is registered in Zambia. Opportunities for potential investors can be seen mainly in the field of agriculture (farms), processing of agricultural commodities and production of food and beverages, renewable energy sources (especially solar and small hydropower plants), healthcare (production of medicines and medical supplies) and tourism.

FTAs and treaties

Treaties with the EU

Under the Everything but Arms initiative, Zambia has the benefit of duty-free importation of goods into European markets without quantitative restrictions. Negotiations on the Economic Partnership Agreement (EPA) between the EU and the countries of the Southern African Development Community (SADC) are continuing. However, the agreement has not yet been signed; Zambia is among the six countries in the SADC region that have not added their signature to the interim EPA.

Contracts with the Czech Republic

The scope of the language base between Zambia and the Czech Republic is limited. Negotiations on the conclusion of an agreement on the avoidance of double taxation have been ongoing for several years, but the Zambian side has approached them rather lazily. A bilateral agreement on the protection and promotion of investments has not been concluded. Thus, the contractual base between Zambia and the Czech Republic only contains contracts from before the independence of Zambia, or from the 1980s. 20th century, with minimal importance for trade and economic cooperation:

  • Agreement between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Zambia on Cooperation in the Field of Health and Medical Sciences (1987)
  • Agreement on Cultural Cooperation between the Government of the Czechoslovak Socialist Republic and the Government of the Republic of Zambia (1980)
  • Supplementary Convention on Civil Procedure between the Czechoslovak Republic and the United Kingdom of Great Britain and Northern Ireland (1935)
  • Treaty between the Czechoslovak Republic and the United Kingdom of Great Britain and Ireland on Legal Assistance in Civil Matters (1924)
  • Treaty between the Czechoslovak Republic and the United Kingdom of Great Britain and Ireland on Reciprocal Extradition of Criminals (1926)

Developmental cooperation

Zambia is a recipient of development aid and one of the priority countries of the Czech Republic’s foreign development cooperation. The Czech Republic-Zambia program valid for the years 2018 – 2023 focuses on agriculture and rural development. Czech businessmen and investors in Zambia can, thanks to the program of the National Development Bank Guarantee of Foreign Development Cooperation, obtain a guarantee for a loan of up to 80% of the loan principal amounting to CZK 50 million with a guarantee period of up to 8 years.

Prospective fields of study (MOP)

Energy industry

More than 80% of Zambia’s electricity generation comes from a few large hydroelectric plants. However, in recent years, due to climate change, precipitation totals have been decreasing, which (in addition to the age and failure rate of power plants) has resulted in a reduction in production that is not enough to cover the growing consumption, and therefore frequent power outages throughout the country. As a result of economic difficulties highlighted by the COVID-19 pandemic, Zambia became insolvent in late 2020 and is unable to borrow funds to import electricity from other countries in the region, which previously partially offset the deficit. The Government of Zambia therefore supports the development of renewable energy sources. Zambia has very suitable natural conditions for solar energy, experiments are also being done with geothermal and wind sources. The first two larger PV plants in Zambia were commissioned in 2019 and more are under construction. Feasibility studies for the construction of small hydropower plants are being carried out. Major foreign companies are involved in these projects, which are often supported by international financial institutions (World Bank, European Investment Bank, German KfW, etc.) major foreign companies are involved. For Czech companies, this means the possibility of application in the supply of equipment and technologies, especially for solar and small hydro, but also wind, or geothermal power plants. Due to ongoing power outages, there is a significant demand for backup sources such as diesel generators and, more recently, the increasingly popular inverters.

Entertainment and leisure

Although the COVID-19 pandemic has fundamentally slowed down the dynamic development of tourism in Zambia in recent years, it still remains one of the three main priorities of the national development strategy. Zambia offers similar natural attractions to the surrounding countries, but the number of foreign tourists is still relatively low compared to them, a significant part of the country’s nature reserves are still very little visited and this sector continues to offer significant growth potential. The basic prerequisite for its use is the development of tourist infrastructure, both in terms of quantity and quality. In addition to the construction of access infrastructure (roads, local airports and their equipment), it involves the construction of accommodation facilities, the development of the hotel industry, gastronomy and related services. The development of agritourism is also supported by some important foreign donors with regard to the protection of forests and biodiversity, especially the EU, which has set “green” recovery after the COVID-19 pandemic as a top priority for the period 2021-2027. Thus, the possibilities of using various programs in this area are offered.

Healthcare and pharmaceutical industry

The COVID-19 pandemic has fully revealed the completely inadequate state of the Zambian healthcare system, which is faced with a fundamental lack of technical equipment, medicines and professional personnel. The state healthcare system has been significantly underfunded for a long time and does not offer standards approaching healthcare in developed countries, the situation is slightly better in private healthcare facilities. However, the demand for better health care is growing with the growth of wealth and the expanding middle class among Zambians, another impetus was precisely the COVID-19 pandemic, which significantly complicated trips abroad for medical care (traditionally most often to South Africa). Czech manufacturers and distributors of medical technology and material have a chance to apply themselves in supplies for private clinics, several state hospitals financed from abroad are also in the stage of preparation or construction.

Agricultural and food industry

Zambia has vast areas of uncultivated agricultural land, significant groundwater resources and a favorable climate. However, the problem is the small diversification of agricultural production, the lack of mechanization, artificial irrigation and other techniques. The downstream food industry is very underdeveloped. Zambia is therefore forced to import a significant part of domestic consumption, especially products with higher added value, most often from South Africa. However, the COVID-19 pandemic has brought complications for supplies from abroad, as well as a drastic weakening of the Zambian currency, which makes imports disproportionately more expensive. In Zambia, there is therefore a growing interest in domestic production on the part of consumers, agricultural associations and relevant state institutions. The governments of South Africa and Zambia have agreed to work towards increasing the representation of Zambian food in the offer of large South African retailers who dominate the Zambian market. In Zambia, for the above reasons, the demand for a wide range of agricultural machinery, both for large and small farms, irrigation systems, as well as fertilizers and other chemical products used in agriculture, is growing rapidly. A wide range of technologies and equipment, such as packaging and filling machines, storage and transport equipment, cooling and freezing technology, etc., can be used in the food industry. The import and production of alcoholic and non-alcoholic beverages is also booming, so there is potential for suppliers of equipment for these production operations, including brewing and distilling technologies.

Zambia Trade