Interview: Business engagement between Italy and Zambia offers immense opportunities, Zambia’s ambassador tells the Insider.
ROME – After Zambia’s recent election brought in the new government of President Hakainde Hichilema with a landslide majority, the country is replete with opportunities for Italian companies in the energy, agricultural, mining and tourist sectors, the Zambian Ambassador to Italy, H.E. Dr. Joseph Katema, told the Italian Insider. Zambia also is an ideal hub for Western companies to reach massive markets in southern and eastern Africa, Dr Katema said in a wide-ranging interview.
Italian Insider: Italian companies have been active in Zambia since its independence. How can trade between the two countries be increased?
HE the Zambian Ambassador, Dr Joseph Katema: Currently the trade balance definitely favours Italy, at the moment. That in itself is an opportunity for trade to increase between the two countries, to bring it to more or less an equal footing.
That notwithstanding, we realise that Italy is better placed in terms of technology, which consequently allows it to produce much more than Zambia can. However, that also gives an opportunity for Italian companies to invest and produce in Zambia so that the products can be exported both to Italy again and to the world over, to the global market.
Here they should know that production costs in Zambia are much cheaper than production costs here in Italy. With their technology, their standards will be the same, EU standards, the profitability could be higher and the market is not only to Europe, also they can export to the (regional) market as well. The SADC market in Southern African region and Eastern African regions each have a market of well over 600 million people.
And at government level, Zambian people have signed an investment promotion and protection agreement in 2014 which is aimed at facilitating the growth of foreign direct investment between the two countries. On the trade front, Zambia can export most of their products duty and quota free to Italy and the European Union.
As far as how trade can be increased, it is essential that there’s more business engagement between the two countries.
Look at it from the historical perspective. There was more engagement just after independence. Last time, it was more government to government engagement, where for instance when we needed soemthing in the sector of energy, the Italian government would bring in an Italian company to assist. But this time around, that kind of cooperation is no longer viable. We need engagement of individual companies to cooperate, collaborate with their counterparts in Zambia.
Recently also the mission facilitated the signing of a Memorandum of Understanding between Confindustria and the Zambian Development Agency, their counterpart, increasing the flow of investment and expanding trade and other business opportunities in the two countries. So these two are linking the companies here, small scale and big, to their counterparts.
II: To what extent has it been possible to overcome barriers to trade between Zambia and Italy posed by the effect of the pandemic of Covid-19
ZA: The Covid-19 pandemic has ravaged the entire globe, the whole global economy, so there it is nothing peculiar to our two countries. The countries of the world are truly interdependent, that is what we have come to learn. To that extent, economic activity has generally been affected, all over. So the lesson learned here is that, going forward, we need to deepen lateral coordination ties between the two countries.
II: Energy is one of the sectors where Italy has a significant presence in Zambia, the ENEL concern made a significant investment by building a 34 megawatt solar photovoltaic plant described as the starting point for ENEL green power presence in the country. Zambia has created a special Green Ministry to advance sun and wind energy in addition to the development of more green hydropower in areas not prone to drought. What further prospects are there for Italian companies in Zambia in the energy and infrastructure sectors?
ZA: The Italian presence in the energy sector is not new in Zambia. The bulk of the electricity generated in Zambia comes from the Kariba Dam, which was constructed by an Italian company. During the liberation struggle of Zimbabwe, after the unilateral declaration of independence by Rhodesia, Zambia cut ties with Rhodesia. We had nowhere to get fuel from. So we had to open a route to get fuel from the port of Dar-es-Salaam. The Italian company, Fiat, was at hand to assist in transportation of fuel from Dar-es-Salaam into Zambia. The bulk of the fuel was coming, using Fiat vehicles and trucks. That necessitated the establishment of a Fiat plant in the east of Zambia. Consequently they needed to build an oil refinery, which was built by the then AGIP, which is ENI now. So actually now the refinery which we do have here which produces fossil fuel was constructed by AGIP. So they are not new in the energy sector of the Zambian scenario, the only thing now which comes into play is that it’s no longer government asking this government to go and do this and that and that, so it is up to companies here in Italy to see opportunities in Zambia and companies in Zambia to see opportunities in Italy and engage.
The prospects in the energy sector in Zambia are enormous, not only because Zambia is moving along the industrialisation path, but also the entire continent is in dire need of energy and renewable energy.
There is an interconnectivity between the countries in the region where whoever puts in, who has extra energy put on the line. which can be used by other countries in the region and who has got less can utilise also the same. It has become unavoidable for Zambia to find energy for power generation. The electricity sector has been experiencing adverse effects of climate change, especially due to the country’s heavy reliance on the hydro-power generation, the Kariba and other hydro-electric power stations. So the government seeks to diversify the energy mix by delivering affordable, clean energy through alternative sources: geothermal, wind energy and also biofuel as well. Therein lies the opportunities for Italian companies. Suffice to say also that when the Italian companies come for to install plants - hydro, solar energy plants and other hydroelectric plants, it is necessary for a startup, there is need for those companies to have to be stationed in Zambia and in the region as well so that they can produce solar panels and other accessories which are required for giving the step-down transformers and other things which are required in the transmission in the overall chain of energy. Zambia is centrally situated in the region.
It’s the link between eastern and southern Africa and we are members of SADC (South African Development Community), of COMESA (Common Market for Eastern and Southern Africa), and CFT (African Continental Free trade Area). And also the general market of African countries. And there is also need for expansion of the existing machinery because of ongoing rural electrification programs.
II: In addition to energy, Italian companies have significant know-how in machinery and technology. What role can Italian companies play in developing agriculture in Zambia?
ZA: Agriculture is a priority area in the current government’s development agenda, as the country moves towards diversification of its economy, technology is an equally important aspect in the agricultural sector. An increase in investments by Italian companies in Zambia would contribute the adoption of more useful technology in the sector for more production and productivity. We are aware that Italian technology is very sought after even by European Union standards.
In addition to contribution to mechanisation and advancing processing capacities in Zambia, Italian investors can equally participate in the farm block development. In trying to develop agriculture and diversify and grow agriculture sector, the government of Zambia have identified regions with its added advantages. In every province they have identified some areas which are called ‘farm blocks’ - about 100 thousand hectares in every province, so that in that area they can grow and process and add value to those products which we can grow well there. There is a comparative advantage in that area. Italian agriculture companies can participate in the farm block agricultural system. There are areas which can grow -- coffee, cashew nuts, tobacco, pineapples, mangoes, different foods ... there are comparative advantages to these -- avocado, cotton.
Those who are exporting machinery, can establish plants which can act as repair hubs and suppliers of spare parts, also giving technical assistance in the region. For instance I am aware that Italian farm parts for pumps and other accessories are sought after by our farmers in Zambia, they are preferred.
II: Zambians used to pride themselves on being the biggest copper producing country. Now Zambia lost that position but the government has said that much lost ground could be regained. Can there be opportunities for italian companies in the mining sector?
ZA: The mining sector has historically been the mainstay of Zambia’s economy. The situation now has changed, however it should be stated that the forecast in the mining sector was mainly with the production of copper. And as much as we are trying to diversify the economy away from mining, we want also to diversify the mining industry itself, that is, there are a lot of minerals which abound in Zambia, apart from copper. You know copper walks hand in hand with cobalt. There are massive high grade reserves of manganese and other minerals, we know of nickel and gold which is being enhanced, albeit at a small scale, but the reserves are abundant. Therefore Zambia still holds the prized position of being the destination for investors who wish to invest in the sector, and we are inviting the Italian sector.
Previously, historically again, we used to have Italian companies who were very much involved in the mining sector, in the transportation sector in the mining industry, we used to have Italians providing transport services to the mining sector. In my constituency there was a transporter for copper to port.
Apart from copper, we also have gemstones, abundant gemstones. Of economic value, we have emeralds, which have got the highest value in the world. We are going green, copper is important in the manufacture of electric cars, cobalt is required for electric batteries. And it is abundant in Zambia, so, Italy being a leader in the green energy sector should look with interest. This potential venture in the mining of these highly sought for minerals adding value, as a producer for cables.
There is an event being organised right now at the a little while from now that will be trying to engage Italian companies to come into the mining sector in Zambia. Rhat’s being organised between the Italian Embassy in Lusaka and the European House Ambrosetti, based here in Italy. There will an event there where the Italian Vice Minister of Foreign Affairs will be gracing the occasion.
The Italian companies are also known for car manufacturing who will be probably well advanced in the value addition process of slowly creating chips that are used for green electric cars which are now becoming more and more commonplace in the world over - so that is another opportunity.
II: The IMF said public debt reached 128.7 pc of GDP, one of the highest ratios on the continent, but the current government has plans underway to deal with this radically. Does that mean that the future economic stability of Zambia is assured?
ZA: Indeed, the economic stability of the country is very much secure. The government has since applied for debt instruction under the common framework for debt beyond the service initiative to list funds for other sectors. Zambia has also approached the IMF for a funded programme to support this economic reform programme that will no doubt restore the economic stability and sustainable economic growth.
We also have to look it as a coin which has two sides. We very much needed infrastructure, basic infrastructure to spur economic growth. Economic growth cannot happen without the basic infrastructure, like roads, airports, and electricity. So, that’s a route to double electricity generation which we have in these 10 years, we have a surplus now. And airports, expanded airports, has facilitated trade without which economic growth cannot happen. So the base is built for economic development.
II: Tourism is of course important to Zambia, Zambia is known a for its great natural beauty, wildlife and tourism attractions - Victoria Falls and Lake Kariba - how can Italians be encouraged to enjoy opportunities for holidays in Zambia and how can Italy make it easier for Zambians to come here on holiday?
ZA: We welcome Italian investment in tourism and hospitality industry. This is in view to attract Italian tour agencies, who know the peculiar interests of Italians, who can create a tour package that is appealing to the Italian tourists. For them a government offer that generates incentive to take a package to investors in the tourist sector, realising that it is one of the industries is the biggest employer. This include tax incentives, which can be sought for by these Italian tourist and hospitality investors.
There should be more prevalent presence of Italian tourists in Zambia. There is a lot of demand for religious tourism by Zambians into Italy. A lot of sites. The Vatican, Turin, Assisi, this weekend I will be taking somebody to Assisi who’s come from Zambia. To increase tourism the Italian government may wish to waive visa fees for Zambian visitors. Zambia is also reducing visa fees now for tourists. Zambia is a safe country.
II: And in the cultural sector, there is the Italo-Zambian cultural centre promoting cultural events in Zambia and Italian language courses through the Dante Alighieri centre. What other ways can cultural and educational links be developed?
ZA: As a matter of fact, we did increase the cultural exchange where people would [get to] know each other. That would increase the economic interactions between the two countries. Nobody can go and invest in a country which they literally know nothing about, but if somebody has toured that country, interacted with those people, it is easier for them to do business between themselves, so it is very important to promote that and, realising that, this mission and its consuls has organised some exchanges between the schools in Naples with the south coast in Lusaka. It’s already done deal, then this issue of Covid came in when the students were already ready to come from Lusaka to Naples and Naples to Lusaka, so that is put on ice.
There is a group who has arrived just recently in Umbria from Lusaka to come and learn some culinary/chef skills, to have a look at Italian cuisine. So this is what is going on between the Embassy there and the Embassy here and our consuls.
Also, we are twinning some cities here with cities in Zambia so that we can bring in deeper interactions. The island of Procida, for example, is twinned with a town in north of Zambia called Mpulungu, a port city on Lake Tanganyika, which borders between Zambia, Congo and Burundi.
We want to increase that interaction, from whence shall spring up economic cooperation.
II: What about Italian NGOs active in Zambia - in the fields of health, training, assistance to women and children... - can such Italian NGOs contribute more to Zambia?
ZA: Our government is trying to address the issue of poverty in both the rural and peri-urban areas, although rural poverty remains extremely high. The NGOs there are welcome and encouraged, to complement [the] government’s efforts, especially in the areas of skills training and economic empowerment initiatives and I would encourage the NGOs to go more into the rural areas. They’re trained with the NGOs generally, not necessarily Italian NGOs but generally NGOs love to crowd around the capital cities, so I would encourage them to venture out to more rural areas.
II: Zambia is often described as a beacon of peace within Africa that has never been to war and continues living in harmony with over 72 different ethnic groups present. Can the Zambian political model be an example for other countries in Africa and elsewhere?
ZA: Indeed, Zambia had just in the winter an election. We saw a smooth transition of power from one regime to another, without any problems, and that is generally typical of the Zambian scenario. This is not the first time we have held elections and a different political party coming into power and smooth transition of power. This is the third time.
Zambia has historically been a proponent of peace in both the region and beyond. Peace has been the characteristic that defines Zambia itself and a characteristic which Zambians continue to cherish. This is why Zambia has been home to many liberation movements in Africa, leading to their independence and a place where most of the peace agreements and independence negotiations were being negotiated and signed. Unity and the peace were inculcated into our culture.
It is naturally the culture of the people, the different cultures of the people, enhanced by our founding father, Kenneth Kaunda, after independence."
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