Investment Promotion Division
Most countries have recognised the importance of foreign direct investment (FDI) inflows for their economic growth, poverty alleviation and development in general. FDI is widely acknowledged to be an essential engine of economic growth, especially in developing countries. FDI inflows are simply capable of creating employment, transfer technology, increase government revenue and contribute positively to the capital formation process of host economies. Investment also provides goods and services needed to improve living standards and contribute to taxes necessary for public investment in health, education other services.
As a result of these and many other potentially positive roles that FDI plays, ZDA’s Investment Promotion Division (IPD) has been mandated to attract and promote more investment inflows through various reform programmes for the country to have a bite of the world’s investment cake.
The recorded increase in world investment inflows confirms the important point that there is no scarcity of sources of foreign investment in Zambia. Therefore, the task facing the country’s IPD at the ZDA is thus not one of scarcity of resources but rather one of increasing the country’s capacity and capability to attract a greater share of available international private capital. The ZDA’s principal challenge is one of presenting the country to the world of investors as an ideal investment location, able to offer opportunities and conditions commensurate with those currently offered by the developing nations that are in dire need of FDI like Zambia.
Therefore, the overall mandate of the investment promotion and privatisation division is to promote Zambia’s investment opportunities locally and to the outside world in order to attract foreign and local investors in different sectors of the economy better than it has been done before. Specifically, the division is responsible for investment promotion, privatisation and establishment of Multi-Facility Economic Zones (MFEZ). The main objective of the MFEZ programme in Zambia is to catalyse industrial and economic development through facilitation of investment in Multi-Facility Economic Zones for the purpose of enhancing both domestic and export oriented business.
Within its overarching mandates, the Investment Promotion Division is responsible for improving the investment environment in the country in order to help to increase both domestic and foreign investment and to enhance their contribution to national economic development. Success in promoting investment requires a careful calculation of how to employ resources most effectively and how to organise investment promotion activities within the economy so that the overriding goal of economic development through improvements in the investment climate remains at the forefront of policymaking.
Impact of direct investment on the domestic economy
The economic benefits of both local and foreign direct investment may be measured by the favourable and positive impact on factors or indicators, which include government revenue, employment generation, export earnings, technology transfer to and skills training for resident employees as well as multiplier economic effects to utility service providers and the general public. FDI further introduce new competence by demonstrating new technologies and training workers who later take employment in local firms. It also forces local firms to improve their managerial abilities or to adopt some of
the marketing techniques used by foreign companies either on the local market or internationally for them to found a niche in the market.
The benefits of direct investment can be also viewed in terms of its quantitative effects on growth, as measured by gross domestic product. Because of its potential for such multiplier effects, many countries, including Zambia have embarked on reforms to attract both local and foreign direct investment. The impact of direct investment on the Zambian economy can be evaluated in terms government revenue injection, pay as you earn, corporate tax and value added tax, among others.
Governments world wide need both tax and non-tax revenues to meet the cost of financing its national expenditures. All governments require taxation to fulfill their functions. Most of such government revenue is injected by the private sector. Surveys by the ZDA for the period 2004-2006, revealed that the private sector investment contribution to the treasury through pay as you earn (PAYE) increased from K273.4 billion to K333.7 billion. The survey showed that the agriculture sector had the least contribution to the treasury, while the mining sector had the greatest impact in value terms. This was mainly because of the magnitude of investment and employment levels in the sector. The tourism and manufacturing sectors also contributed significantly to the economy.
Corporate tax is another injector of national revenue. Corporate tax contributions are often dependent upon the increased levels of corporate profitability, which often consistent with private capital flows and investor perception, with respect to planned investment and profitability. Accordingly, the Investment Promotion Division of the ZDA has an important role in promoting the country’s investment and creating a favorable investment environment that can lead to the realisation of more investment inflow in the country. The division presents the country’s investment profile to the world in order to attract investors in different sectors of the economy. It identifies things investors look out for, and instruct government how to provide such necessities for increased investment inflow to be realised in the short and long run. It markets the country’s sectors that are investable in and ensures that an investment worthy climate is created for the investors to have confidence in the economy in which they could be investing their money.
In conjunction with other divisions of the ZDA, the investment promotion division interprets all relevant investment fundamentals to investors so that they have a clear picture of the economy they are entrusting their money into. Some of such aspects are those to do with the political environment, economic, social, environmental, technological and legal environments. Such information is cardinal to both investors and policy makers to ensure that all ingredients of development are provided for by relevant authorities. The division simply analyses the investment environment and communicates its findings to policy makers in order for policy makers to unify all investment requisites in the investment policy framework of the country. It (investment promotion division) further communicates the investment atmosphere in the country as planned in the nation’s development agenda.
The division also analyses key economic indicators to ascertain the performance of the economy. This gives investors an idea of the kind of economy they could be investing their money and can forecast the returns of their investors. Some of such indicators are inflation rates, interest rates, and gross domestic product, among others.
Besides investment promotion, it monitors and carries out privatisation works of government institutions. It monitors the privatisation programme to ensure that it suits in the economic vision of the country. Although privatisation is currently on the low side, the monitoring of the programme is vital to ensure that forecast results of the programme are realised and the programme pursued in the right context in relation to prevailing economic conditions.
Accordingly, investment promotion is key to any economy for the realisation of a quantum of investment inflow in the domestic economy. The inflow of direct investment in today’s economies is of utmost importance as there can be no meaningful development without it. FDI in particular has been rising globally. Most countries are thus undertaking economic policy reforms to attract investment into their economies. Zambia has also undertaken such reforms to make the business environment conducive for investment. The ZDA has been the forerunner of such reforms since inception to ensure that those policies yield positive results. The Agency has the duty to build and enhance the country’s investment profile for increased investment inflow to be realised. It ensures that not only appropriate investment reforms are put in place, but that there is a change in the way the country is perceived with respect to its sustainability as an investment destination. Perceptions are critical and important, in that they influence decisions regardless of facts on the ground. Therefore, the ZDA has the mandate of promoting Zambia as an investment destination and build that image for long term benefit of the economy from the investment inflows.
Most countries have recognised the importance of foreign direct investment (FDI) inflows for their economic growth, poverty alleviation and development in general. FDI is widely acknowledged to be an essential engine of economic growth, especially in developing countries. FDI inflows are simply capable of creating employment, transfer technology, increase government revenue and contribute positively to the capital formation process of host economies. Investment also provides goods and services needed to improve living standards and contribute to taxes necessary for public investment in health, education other services.
As a result of these and many other potentially positive roles that FDI plays, ZDA’s Investment Promotion Division (IPD) has been mandated to attract and promote more investment inflows through various reform programmes for the country to have a bite of the world’s investment cake.
The recorded increase in world investment inflows confirms the important point that there is no scarcity of sources of foreign investment in Zambia. Therefore, the task facing the country’s IPD at the ZDA is thus not one of scarcity of resources but rather one of increasing the country’s capacity and capability to attract a greater share of available international private capital. The ZDA’s principal challenge is one of presenting the country to the world of investors as an ideal investment location, able to offer opportunities and conditions commensurate with those currently offered by the developing nations that are in dire need of FDI like Zambia.
Therefore, the overall mandate of the investment promotion and privatisation division is to promote Zambia’s investment opportunities locally and to the outside world in order to attract foreign and local investors in different sectors of the economy better than it has been done before. Specifically, the division is responsible for investment promotion, privatisation and establishment of Multi-Facility Economic Zones (MFEZ). The main objective of the MFEZ programme in Zambia is to catalyse industrial and economic development through facilitation of investment in Multi-Facility Economic Zones for the purpose of enhancing both domestic and export oriented business.
Within its overarching mandates, the Investment Promotion Division is responsible for improving the investment environment in the country in order to help to increase both domestic and foreign investment and to enhance their contribution to national economic development. Success in promoting investment requires a careful calculation of how to employ resources most effectively and how to organise investment promotion activities within the economy so that the overriding goal of economic development through improvements in the investment climate remains at the forefront of policymaking.
Impact of direct investment on the domestic economy
The economic benefits of both local and foreign direct investment may be measured by the favourable and positive impact on factors or indicators, which include government revenue, employment generation, export earnings, technology transfer to and skills training for resident employees as well as multiplier economic effects to utility service providers and the general public. FDI further introduce new competence by demonstrating new technologies and training workers who later take employment in local firms. It also forces local firms to improve their managerial abilities or to adopt some of
the marketing techniques used by foreign companies either on the local market or internationally for them to found a niche in the market.The benefits of direct investment can be also viewed in terms of its quantitative effects on growth, as measured by gross domestic product. Because of its potential for such multiplier effects, many countries, including Zambia have embarked on reforms to attract both local and foreign direct investment. The impact of direct investment on the Zambian economy can be evaluated in terms government revenue injection, pay as you earn, corporate tax and value added tax, among others.
Governments world wide need both tax and non-tax revenues to meet the cost of financing its national expenditures. All governments require taxation to fulfill their functions. Most of such government revenue is injected by the private sector. Surveys by the ZDA for the period 2004-2006, revealed that the private sector investment contribution to the treasury through pay as you earn (PAYE) increased from K273.4 billion to K333.7 billion. The survey showed that the agriculture sector had the least contribution to the treasury, while the mining sector had the greatest impact in value terms. This was mainly because of the magnitude of investment and employment levels in the sector. The tourism and manufacturing sectors also contributed significantly to the economy.
Corporate tax is another injector of national revenue. Corporate tax contributions are often dependent upon the increased levels of corporate profitability, which often consistent with private capital flows and investor perception, with respect to planned investment and profitability. Accordingly, the Investment Promotion Division of the ZDA has an important role in promoting the country’s investment and creating a favorable investment environment that can lead to the realisation of more investment inflow in the country. The division presents the country’s investment profile to the world in order to attract investors in different sectors of the economy. It identifies things investors look out for, and instruct government how to provide such necessities for increased investment inflow to be realised in the short and long run. It markets the country’s sectors that are investable in and ensures that an investment worthy climate is created for the investors to have confidence in the economy in which they could be investing their money.
In conjunction with other divisions of the ZDA, the investment promotion division interprets all relevant investment fundamentals to investors so that they have a clear picture of the economy they are entrusting their money into. Some of such aspects are those to do with the political environment, economic, social, environmental, technological and legal environments. Such information is cardinal to both investors and policy makers to ensure that all ingredients of development are provided for by relevant authorities. The division simply analyses the investment environment and communicates its findings to policy makers in order for policy makers to unify all investment requisites in the investment policy framework of the country. It (investment promotion division) further communicates the investment atmosphere in the country as planned in the nation’s development agenda.
The division also analyses key economic indicators to ascertain the performance of the economy. This gives investors an idea of the kind of economy they could be investing their money and can forecast the returns of their investors. Some of such indicators are inflation rates, interest rates, and gross domestic product, among others.
Besides investment promotion, it monitors and carries out privatisation works of government institutions. It monitors the privatisation programme to ensure that it suits in the economic vision of the country. Although privatisation is currently on the low side, the monitoring of the programme is vital to ensure that forecast results of the programme are realised and the programme pursued in the right context in relation to prevailing economic conditions.
Accordingly, investment promotion is key to any economy for the realisation of a quantum of investment inflow in the domestic economy. The inflow of direct investment in today’s economies is of utmost importance as there can be no meaningful development without it. FDI in particular has been rising globally. Most countries are thus undertaking economic policy reforms to attract investment into their economies. Zambia has also undertaken such reforms to make the business environment conducive for investment. The ZDA has been the forerunner of such reforms since inception to ensure that those policies yield positive results. The Agency has the duty to build and enhance the country’s investment profile for increased investment inflow to be realised. It ensures that not only appropriate investment reforms are put in place, but that there is a change in the way the country is perceived with respect to its sustainability as an investment destination. Perceptions are critical and important, in that they influence decisions regardless of facts on the ground. Therefore, the ZDA has the mandate of promoting Zambia as an investment destination and build that image for long term benefit of the economy from the investment inflows.
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