• This is good for the new dawn government.
• The mining sector will change the narrative from exporting raw materials to exporting finished products.
• Agro business will be going into agro-processing.
An Economist says Zambia will become an investment destination for most foreign countries following the approval of US$1.3 billion support program by International Monetary Fund (IMF).
Mathews Muyembe told Money FM News in an interview that the country will also see increased Foreign Direct Investment (FDI) inflows, which will encourage Micro, Small and Medium Enterprises (MSMEs)’ participation in economic activities because imports will be cheaper due to a stronger currency.
Mr. Muyembe stated that as the Kwacha continues to gain strength, the country will further see reduced commodity prices in the long term, while broadening the export base as the economy continues to expand.
“This is excellent news, you will recall that the first time Minister of Finance and his team traveled to New York I was very optimistic because of the positive sentiments with regards to how government had outlined its development agenda with regards to fiscal consolidation, with regards to fiscal prudence then at the same time how the intentions were with regards to managing our public debt. Cancellation of some of these projects has given confidence to the multilateral partners such as the IMF and the World Bank.”
“At the same time we are seeing private Creditors, the Paris Club coming in so it’s been interesting that we can have this common framework for debt treatment for third world countries where the IMF feels they need to help the developing countries. This is very timely and we are seeing the manifestation which goes to show the confidence that our developing partners, the IMF and the World Bank have. As such, we will see more foreign companies wanting to invest in Zambia because Zambia will now become a safe haven in terms of investment, they are guaranteed return on investment,” Mr. Muyembe stated.
He added that as a result of the bailout package, the mining sector will change the narrative from exporting raw materials to exporting finished products, with agro business going into agro-processing.
“We will take advantage of our regional membership such as SADC, COMESA, and African Free Trade Area and may be just our neighboring countries, these bilateral relations that we have.”
“This is a very good move for Zambia because what this does is that the fact that it unlocks the first part of the payment, what we will see is more future payments being unlocked and aiding Zambia’s developmental agenda. So this is good for the new dawn government considering the short period in which they have come in. It goes to shows that they mean well,” he added.
Last week, International Monterey Fund (IMF) Executive Board approved a 3 year support program of US$ 1.3 billion based on Zambia’s homegrown economic reform plan that aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.