Zambia’s Asian connection

By Nawa Mutumweno – Zambia has over the years established and enjoyed favourable and sustainable ties with the East, specifically India, China and Japan. These ties spring from the pre-independence days and were cemented during Zambia’s early days under President Kenneth Kaunda.

During a recent visit by Indian Vice President Shri Mohammad Hamid Ansari, he called for the deepening of bilateral ties between the two countries. This visit was undertaken between January 5 and 7, 2010 which also saw him visiting Botswana and Malawi.

“Zambia and India have historically been close allies in the struggle for independence, equality, human rights, freedom and democracy for the Southern African and other developing countries,” he said at the time.

Through India’s ITEC programme, of which Zambia has been a major beneficiary, around 2 300 civilians, several Zambia defence chiefs and over 325 other defence personnel have been trained in the Asian country. On top of this, India’s Military Advisory Team has also assisted in the setting up and running of the Defence Services Command and Staff College (DSCSC) in Lusaka.

The epitome of the two countries’ hand-in-glove relationship is the Indo-Zambia Bank (IZB), a brainchild of Kaunda and Indira Ghandi, which celebrated 25 years of successful operations in the country in December 2009. IZB equity is held as follows:- 60 percent by three Indian public sector banks – Bank of India, Bank of Baroda and Central Bank of India –with the remaining 40 percent by the Zambian Government.

Another investment milestone is a 34 percent shareholding in the Development Bank of Zambia (DBZ) by the Export and Import Bank of India (EXIM).  EXIM has signed a $50 million deal with GRZ, on behalf of ZESCO for the development of the Itezhi Tezhi Power Project. The project is being jointly implemented by India’s Tata Africa Holdings and ZESCO. Recent investments worth of note include the acquisition of the mammoth Konkola Copper Mines (KCM)  by Vedanta Resources and RJ Corporation of India which is set to establish a $30 million Pepsi Bottling Plant  in Lusaka. Nava Bharat Singapore Limited, a subsidiary of Nava Bharat Ventures Limited of India has purchased 65 percent shares in Maamba Collieries Limited from ZCCM-Investments Holdings. Nava Bharat proposes to invest at least $550 million in the firm. According to Ansari, India would provide  a $5 million grant to  the education sector  and also extended  a $75 million line of credit to Zambia.

Under the Africa-India Forum, India intends to reinforce the multidimensional relations existing between Africa and the sub continent and “share benefits from the rich historical background as well as natural resources of both Africa and India.” India has pledged about $500 million in finance projects focusing on human resource development and capacity building in Africa.

Located in south Asia, India is the seventh largest country by geographical area with an estimated population of 1.2 billion, making it the world’s second most populous country. Its average annual Gross Domestic Product for the past two decades is estimated to have been growing at 5.8 percent with the economy being among the fastest growing in the world.

Dubbed the Asia ‘tiger’, China seems to be making serious inroads in Africa, Zambia included.  One example is the China-Africa Development Fund which invests in infrastructure and construction projects.  In the three years of its existence, financing from this organization has virtually changed the face of Africa.

The China-Africa Development Fund (CAD) under the auspices of the China Development Bank (CDB) was approved with blessings at the highest level, the State Council, sealing the way China and the African private sector would partner. As the main initiator of the fund,  the CDB drafted a blueprint on how  the $5bn fund would be ‘unleashed’ into Africa , what it hoped to achieve, how it would establish and develop a resource base  in Africa and foster trade and investment between the two regions.

The fund was launched with $1bn in the first year, increased to $3bn in the second phase, until it eventually amounted to $5bn after three years, according to Gao Jian, the CDB’s vice governor. The business scope of the fund mainly includes equity and quasi-equity investment, fund investments, fund management, investment management and consulting services, with the money being ploughed into African countries’ agriculture, manufacturing, energy sector, transport, telecommunications, urban infrastructure, resource exploration and the development of Chinese enterprises in Africa.

“The CDB attaches great importance to cooperation with Africa. By investing directly in Chinese enterprises which have set up operations in Africa or plan to invest in Africa, the CAD Fund will promote cooperation between Chinese and African enterprises in reaching their goals. It will also facilitate infrastructure construction, and enhance Africa’s social and economic development.

Another mammoth Chinese investment is the $65 million construction of a modern stadium in Ndola, the Copperbelt provincial capital. The kick-off of the construction was officially done by President Rupiah Banda on July 4, 2009. The 45 000-seater  stadium is being built by Chinese firm, Anhui Foreign Economic Construction Corporation (AFECC) on the Kitwe-Ndola dual carriage way. The construction is expected to be ready in 26 months. The company is expected to construct two other stadiums in Lusaka and Livingstone. Geotechnical surveys for the two stadia have since been undertaken.

The China Non Ferrous Metals  has taken over the Luanshya Mine which was place under care and maintenance in December 2008 after laying off about 1 700 miners. Prior to this transaction, the previous owners had handed over the assets of the mine to the Government under the wake of the world credit crunch. The Chinese have also ‘bagged’ the nickel mine in Mazabuka which was on the verge of collapse.

Still on the mining front, the Zambian Government and Zhonghui Guohua Mining Company has signed an Investment Promotion and Protection Agreement (IPPA) that will see the Chinese firm invest over $3.6 billion in mining activities on the Copperbelt and North Western Provinces. The signing ceremony took place in Lusaka in July 2009 and the firm is expected to create more than 34 000 jobs.

Not to be outdone, Higer Bus Company has established a bus assembly plant in Zambia with a view to expanding its market in Africa. It produces about 22 000 buses annually and has a labour force of about 4 000 employees.

Talking about China-Zambia relations would be incomplete without mentioning that masterpiece engineering works, the Tanzania Zambia Railways Authority (TAZARA) which clocked 33 years on July 1, 2009. The “uhuru” railway line is due to receive $39 million loan from the Chinese Government to help revamp the operations of the firm. This financing will go towards improving engines, wagons and rollers in addition to staff development. TAZARA makes an average of $3 million per month.

The Chinese are also involved in the implementation of the $350 million Lusaka Multi-Facility Sub-economic Zone which is set to be operational this year.  The $900 million Chambishi MFEZ  is  now operational.

Japan’s investment in Zambia is synonymous with the gigantic Nitrogen Chemicals of Zambia (NCZ)’s first plant which was constructed by Kobe Steel in the late 1960s and  commissioned in 1970.  Japanese economic collaborations has continued over the years through the Japanese International Cooperation Agency (JICA) which is currently undertaking the Greater Lusaka Master Plan which is scheduled to change the face of the capital city.

Indeed India, China and Japan are Zambia’s all weather friends. And indications are that the relationships will grow from strength to strength as the day glide by. The three national allies have indeed revved into the Zambian economy in top gear!