Zambia: Investor confidence key economic driver

SOME of the key determinants of a good investment climate in any given country are political stability, peace and tranquility as well as the predictability of key economic policies even in the event of a change of Government.

A propitious investment climate can also be created by ensuring that the environment is free of corruption and attendant inconveniences.

Investors want an assurance that they will not be coerced or compelled to pay 'illegal taxes' in form of bribes to politicians and bureaucrats at various levels.

But, by far the most important factors taken into account by potential investors in determining the suitability of a particular investment destination is the security of their investment--especially in the long term--and whether or not a legal regime exists to facilitate expatriation of their profits accrued from their investment.

A concomitant requirement, particularly in the post-Cold War era, is the imperative need to have a democratic dispensation in place, for that acts as a form of assurance that the rule of law would be upheld. Tyranny endangers not only peoples' lives but investment as well.

Zambia meets nearly all these benchmarks and this accounts for the level of foreign investment which the country has been able to attract over the last 20 years when the previous Government pursued a vigorous privatisation programme.

It is undeniable that Zambia is in dire need of Foreign Direct Investment (FDI) to ensure sustained economic development as well as the much-needed value addition to its raw material exports such as copper, which can only be guaranteed if a significant level of technology transfer takes place.

The economic zones that have been set up on the Copperbelt and Lusaka are aimed at boosting the country's manufacturing base, thereby creating more jobs to absorb the ever growing number of unemployed people.

An environment is considered stable and attractive for investment when its policies are insulated from arbitrary measures which are not in conformity with the law.

Public officials should desist, as much as possible, from creating an impression--wittingly or unwittingly--that official Government policy could be repudiated at the stroke of a pen.

The assurance which President Michael Sata has given to investors, both local and foreign, that Government remains committed to maintaining a conducive investment climate, has come at the right time.

Markets the world over are amenable to several factors which could either influence the economy in a positive direction or have a deleterious effect on the economy as a whole.

This is all the more reason why Governors of central banks all over the world avoid careless statements on key economic policies because the full import of their statements invariably impact on the economy negatively.

In the same vein, Cabinet ministers and their deputies should similarly avoid a bullish approach on sensitive matters which might be construed as an attempt to arm twist foreign investors to adopt a more benevolent attitude towards their employees.

All politicians, particularly those commenting on labour matters, should desist from using crude or intemperate language which suggests a certain degree of belligerence. The on-going campaign to ensure fair compensation packages for Zambian workers employed by foreign investors should be conducted within the confines of the law.

The days of the 'commandist' economy, prior to liberalisation, when the State controlled pricing of goods and services, dictated the wage/salary structure and fixed the exchange rate, are long gone.

These methods were debunked because they never produced the desired results.

The market, in spite of all its imperfections, (the so-called vagaries of the market), should enjoy unfettered freedom to determine the key variables of a given economy. That is the essence of a free market economy.

As the President aptly observed in yesterday's statement, arbitrary positions expressed by some ministers and Government officials could induce loss of confidence in our country and imperil the prospects of achieving poverty alleviation and reduction in the shortest time possible.

Zambia is competing with other countries for investment and should proceed with caution to avoid scaring away investors.

Source: http://allafrica.com

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