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SOUTHERN AFRICA: Zambia reaps as Zimbabwe lies fallow
IRIN News
May 31, 2006

http://www.irinnews.org/report.asp?ReportID=53632

LUSAKA - (This is the first in a three-part series on the impact of the Zimbabwean meltdown on its neighbours. The series kicks off with a report on the influence of the Zimbabwean implosion on Zambia. Read other articles in the series: South Africa gives Zimbabweans a haven, but at what cost? and Mozambican romance gone sour for Zimbabwean migrants

Frustrated by more than five years of faltering economic growth, Zimbabwean skills and investors have sought other markets in the region. The gamble by migrant Zimbabweans to start afresh in neighbouring countries has paid off for some, but been less profitable for others.

The relationship between migrant Zimbabweans and their neighbour to the northwest, Zambia, has generally been mutually beneficial. According to the state-run Zambia Investment Centre (ZIC), Zimbabweans have made business commitments worth more than US$73 million since 2002, creating almost 10,000 jobs.

The World Bank and the International Monetary Fund, two of the world's leading multilateral lending institutions, estimate that harsh economic conditions may have forced a quarter of Zimbabwe's 12 million people to seek survival elsewhere.

Zimbabwe has suffered acute shortages of food, fuel and foreign currency since its fast-track land reform programme began in 2000; housing, education and transport costs have jumped and, according to the IMF, the country has the highest inflation rate in the world.

Tony Hawkins, a professor at the Graduate School of Management of the University of Zimbabwe, said recently that until 2002, Zimbabwe was the second largest economy after South Africa in the 14-member Southern African Development Community; now only Malawi and tiny Swaziland and Lesotho are worse off.

Zimbabwean street traders, farmers, investors and professionals have settled in Zambia: Peter Moyo, 28, earns a living selling fruit juices, peanut butter, biscuits and chocolates on the busy streets of Zambia's capital, Lusaka.

"Out here life is a lot easier", he remarked. "By bringing in cheap products from Zimbabwe without paying tax, I make enough money to buy many things I need back home." Low costs make it possible for him and other Zimbabwean street vendors to sell their goods at half the price charged by Zambian stores.

Moyo and a host of other small traders have infiltrated Lusaka, earning up to US$20 a day, or about $600 a month. They only have to take care of their daily expenses, such as food and accommodation, but a room in Lusaka's high-density townships can be had for $3 per night. With a good turnover, they return to Zimbabwe as often as every two weeks for more stock.

President Levy Mwanawasa's government has also kept its doors open to investors from across the Zambezi. Between January 2002 and April this year, the ZIC issued 78 investment licenses to Zimbabweans in various sectors. Of these, over 50 were in the agricultural sector, covering machinery supply, horticulture and the production of tobacco, maize and wheat. Others have invested in manufacturing, construction, health, services, tourism and transport.

"Most Zimbabwean investors came between 2003 and 2004, when we recorded 30 and 19 investment projects, respectively. So far, we have not had any revocations of investment certificates held by Zimbabwean investors over this period, an indicator that they are satisfactorily implementing their projects," said ZIC's acting director of marketing and investment promotion, Sharon Sichilongo. "Since 2002, Zimbabweans have made investment commitments worth $73,491,141 and their 78 projects have created 9,771 jobs for the local people."

Zambia has proved to be an attractive investment destination to Zimbabweans because of the government's emphasis on private-sector participation in the economy, and the removal of subsidies and price controls, explained Sichilongo.

Abolishing foreign exchange controls and the policy of allowing repatriation of profits have been further incentives, while a steady decline in inflation and a stable gross domestic product growth rate over the last few years have created a favourable foreign investment climate and made Zambia a regional competitor. In April, single-digit inflation of 9.4 percent was achieved for the first time in over three decades, according to the Central Statistical Office.

Although the Investment Centre has registered only 50 Zimbabwean agriculture investors, many of them are white commercial farmers.

Songowayo Zyambo, executive director of the Zambia National Farmers' Union, said more than 120 former Zimbabwean commercial farmers were members of the organisation. "They are contributing greatly to Zambia's improved agricultural production by cultivating huge hectares of the land that was just lying idle in the past."

Zambia has been recording bumper harvests since 2002, except for the 2004/05 farming season when rainfall was erratic. The arrival of foreign farmers has boosted production in the Mkushi district in central Zambia.

"These Zimbabwean white farmers have employed a lot of local workers - some have over 400 workers, which is why we are seeing an influx of people from other parts of the country coming to seek employment here. Our standards of living have tremendously improved ever since they settled here," said district commissioner Sydney Chileshe.

The Zimbabwean meltdown has had a disastrous effect on tourism at its prime destination, the Victoria Falls. Zambia, which shares the Falls, has run an aggressive marketing campaign to attract tourists not only to view the 'Smoke that Thunders' but also to sell other lesser-known spots.

Erol Hickey, chairperson of the Zambia National Tourism Board and patron of the 'Visit Zambia Campaign', commented, "The private sector has really benefited so much from the Zimbabwean situation. Although we cannot put figures to it just now ... most tourists are coming in through Livingstone [in Zambia] and it is true that the profits for all tourism operators have doubled since the year 2003."

Hickey said the recent appreciation of the kwacha against major foreign currencies had affected the success of the sector this year, but Zambia was still gaining in popularity, even in non-English speaking countries.

Though it is open to debate, many analysts say the country owes its steady economic improvement to the confusion in neighbouring Zimbabwe, which has made Zambia a favourite destination in the region.

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