26 December 2011
A PRELIMINARY report on Foreign Private Investments and Investor participation in Zambia in 2011 has revealed that rampant corruption was among the major factors that impacted on foreign direct investments.
The report reveals that corruption had negatively influenced investment decisions in some sectors of the economy which were under survey during the period under review.
Zambia Development Agency(ZDA) official Collins Sefula who released the report in Lusaka, said corruption increased the cost of doing business in Zambia and perpetuated bureaucratic inefficiencies, especially in the public service.
Another factor which negatively influenced foreign direct investments from coming to Zambia, was the issue of high fuel prices.
High fuel prices increased the cost of production and costs of other business inputs.
The Bank of Zambia in collaboration with the ZDA and Central Statistical Office (CSO) conducted phase four of the Foreign Private Investment and Investor Perception Survey during the third quarter of 2011.
Mr Sifafula said fuel prices affected profitability and market expansion of business enterprises.
Mr Sifafula, however, said the report did not take into account Government’s recent reduction in fuel pump prices.
He said high interest rates, level of disease burden and the non availability of technical staff were some of the negative influences to investment decisions.
He said the most important economic and financial factor that positively influenced investment decisions in Zambia was the domestic economic growth.
Mr Sifafula said the condition of infrastructure was critical in attracting desired levels of investments across sectors and this was in addition to the cost and efficiency of services such as fuel, electricity, water and sanitation, telecommunication, internet, banking, customs and business licences.
Mr Sifafula said the general investment climate and Government’s inward investment promotion policies were perceived as positive factors on investment decisions.
He recommended that Government’s sector and industry specific policy intervention were required for both investment promotion and the addressing of “potholes”.
Mr Sifafula said the recent developments in the global economy adversely affected some of the companies in terms of access to international credit, global markets, export earnings and profit margins.
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