BOZ

THE BANK of Zambia says a recent survey shows that Zambia’s net foreign direct investment inflows sharply declined by 58.7 per cent to US$486.1 million in 2016 from US$1,177.4 million in 2015.

During the 2017 dissemination workshop on foreign private investment and investor perception in Zambia, BOZ deputy governor Dr Bwalya Ng’andu said the survey captured the magnitude, types, sources, and direction of foreign private investment for the year 2016 and the first and second quarters of 2017, as well as the investor’s perceptions on the investment climate.

He said one of the major findings of the survey was that the total private foreign investment inflows which includes FDI, portfolio and other investments to Zambia dropped by 54.9 per cent to US$1,078.9 million from US$2,392.5 million in 2015.

“Out of the total private foreign investment, FDI inflows accounted for the largest share of 61.3 per cent, followed by other investment at 37.2 per cent and portfolio equity investment at 1.5 per cent. Another key survey finding is that net FDI inflows recovered in the first half of 2017, at US $599.8 million compared to US $462.2 million recorded in the first half of 2016. During the first half, the total private foreign investment inflows improved, rising to US$676.2 million compared to US$358.8 million recorded in the first half of 2016,”

Dr Ng’andu said.

“The survey also points to the important role that majority owned foreign affiliates (MOFAs) play in our economy. These are resident enterprises with a single foreign enterprise or an associated group of foreign investors owning more that 50 per cent of the ordinary shares or the voting power. Survey results revealed that these companies generated sales/turnover amounting to US $11,147.1 million (albeit lower than US $11,795.4 million recorded in 2015) and accounted for 83,601 employees from 77,570 employees recorded in 2015. During the same period, assets of these enterprises were US$27,314.8 million, while their net worth, stood at US$6,483.9 million. These enterprises recorded net tax payments of US$264.3 million compared to net tax refunds of US$35.0 million in 2015.”

He said in 2016, emphasis from both the fiscal and monetary policy authorities was placed on stabilising the macroeconomic environment, following the challenges experienced in 2015.

“On the monetary policy front, in 2016 the Bank focused on achieving an end-year inflation target of 7.7 per cent, while anchoring inflation expectations in single digits over the medium-term. In line with the inflation objective, the Bank maintained a tight monetary policy stance by keeping the Policy Rate at 15.5 per cent and the statutory reserve ratio at 18 per cent throughout the year,” said Dr Ng’andu. “These measures achieved the desired results, as inflation slowed down to single digits with inflation decelerating to 7.5 per cent at end-2016 from 21.1 per cent at end-2015. The exchange rate of the kwacha against the US dollar remained relatively stable with an appreciation bias and we saw on the average an appreciation from ZMW10.9806 to ZMW9.8364. Furthermore, the overall balance of payments deficit narrowed to US$187.6 million in 2016 from US$393.3 million in 2015,  mainly on account of favourable financial account performance. Real GDP grew by 3.8 per cent compared to 2.9 per cent in 2015.”

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