• Overall net foreign liability outflows of US$74 million were recorded in 2020.
• FDI liability inflows amounted to US$200 million compared to US$860 million in 2019.
• The United Kingdom was the major recipient of 4 foreign asset flows.

Bank of Zambia (BoZ) has disclosed that the stock of private sector foreign liabilities declined by about 5.0 percent US$21 billion in the year 2020.
Speaking during the Virtual Dissemination Workshop for the 2021 Survey on Foreign Private Investment and Investor Perceptions in Zambia, Bank Deputy Governor – Administration, Rekha Mhango attributed the decline to the fall in the stock of Foreign Direct Investment (FDI) owing to valuation effects on equity mostly held by the mining and quarrying sector.
Ms. Mhango disclosed that private sector external debt, which accounted for about 80 percent of foreign liabilities, increased by 5 percent to US$17 billion due to revaluation changes in non-US dollar denominated loans predominantly in the electricity, manufacturing, information and communication as well as real estate sectors.
“In terms of flows, overall net foreign liability outflows of US$74 million were recorded in 2020 against net inflows of US$357 million in 2019. This was due to loan repayments to non-affiliates by the mining, manufacturing, electricity as well as wholesale and retail trade sectors, and the reduction in currency holdings by non-residents in domestic deposit-taking corporations,” Ms. Mhango said.
She however noted that, Foreign Direct Investment liability inflows amounted to US$200 million compared to US$860 million in 2019.
“Reduced re-invested earnings and debt repayments, largely by the mining and quarrying sector, accounted for the decline in FDI inflows. Canada continued to be the major source of private sector foreign liabilities.”
“The stock of private sector foreign liabilities declined further in the first half of 2021 to US$20 billion due to loan repayments mostly by the mining and quarrying sector as well as revaluation effects on equity. However, a net inflow of about US$600 million was recorded against net outflows of US$295 million a year ago,” she stated.
Ms. Mhango further disclosed that the United Kingdom was the major recipient of 4 foreign asset flows as most of the private sector assets are domiciled there.
She explained that the decline in stock of private sector foreign liabilities in the first half of 2021 was as a result of the upswing in FDI inflows on account of higher reinvested earnings by the mining, deposit-taking corporation, manufacturing, electricity, as well as information and communication sectors.
She added that results of the survey also showed that the stock of private sector foreign assets rose by 16 percent to US$3.0 billion in 2020 mainly as a result of the increase in currency and deposits by the mining and deposit-taking corporations.
“The surge in the holdings of currency and deposits contributed significantly to the increase in foreign asset flows by 60 percent to US$700 million.”
“With regard to investor perceptions, political stability, ease of doing business, availability of resources, and market potential continued to feature as the main factors that influenced re investment in Zambia. Despite the unprecedented effects of the covid-19 pandemic in constraining the business investment, the promotion of the use of digital financial services and the reduction in the monetary policy rate were seen as positive measures that supported business activity,” Ms. Mhango explained.
This year’s Private Sector Foreign Investment and Investor Perception Survey response rate was 54.0 percent, a slight reduction from the 56.0 percent recorded in the 2020 survey.
The 2021 survey summarizes the magnitude, type, sources, and direction of the private sector foreign capital for the year 2020 and the first half of 2021, as well as investor perceptions on the investment climate in Zambia.