AFRICANEWS

Zambia

Are foreign investors overlooking the law

Governance

As foreign investors expand their business empire, Zambian businessmen and the public are questioning the government on what kind of investment the country needs. The government too, is concerned, but there is no legislation to bar foreign investors from any particular business.

The advent of economic liberalisation has seen an upsurge in investment, both foreign and local. This has also heralded an increase in job creation and improvement in the quality of merchandising- as seen in new outlets like Shoprite and Supreme Furnishers.

But the downside is that this has also seen an influx in small-scale foreign investors who, arguably, do not add value to the economy and are an affront to the indigenous small-scale businessmen.

In almost all the townships, butcheries, bakeries, and clothing and grocery shops, owned by foreign investors, mainly of Asian or Middle East origin, have sprang up. The local businessmen are not happy that foreign investors should venture into businesses that should be left for Zambians.

Many Zambians feel the government should introduce a legal requirement for minimum capital investment for foreign investors so that they do not venture into small businesses which should be left to locals.

They are also questioning why Zambia, like other countries, is not regulating the minimum capital a foreign investor should bring into the country to qualify for an investment licence.
"If foreign investors start running grocery shops, butcheries and selling salaula, what will the Zambians do," asks a businessman of Lusaka's Chilenje South township.

"The government should protect small-scale Zambian businessmen by setting a minimum capital investment for foreign investors," Another Chilenje South resident, David Chiyesu, said "I don't think this is the kind of investment the government and people of Zambia would envisage. This kind of investment does not add value to the Zambian economy." He added: "You can't have serious investors baking scones and selling second hand clothes. We want serious investors and not people who are coming here to try to eke a living," he said.

The Government is equally concerned about the influx of small scale foreign investors and is working towards improving both investment legislation and the climate for foreign investment.
Commerce, Trade and Industry Minister William Harrington says the current Investment Act needs to be amended to incorporate such issues as setting minimum capital investment foreign investors. ”The ministry of Commerce through Investment Centre is working hard to improve both investment legislation and the climate for investment," Mr Harrington said.

He said the government has observed an influx of Asian, especially Chinese small-scale businesses, in the trading sector and that some of them do not go through the investment centre mainly because they would not have the capacity to fulfill the criteria set by the investment Board.

"Some of these people come under tourist visas and should therefore not engage in business. It is a matter for the Immigration Department. "But while it is still a matter for immigration, we are working to improve current investment legislation and the climate for foreign investment to address this issue," the minister said.

Mr Harrington explained that certain activities such as trading were not eligible for investment licences and that the Investment Centre would not actively encourage foreign investment into certain sectors which are ably handled by Zambians.

"These activities which should be left to Zambians include butcheries and bakeries. Having said that, the government policy of liberalisation transcends all sectors. As such, it is difficult to close off certain sectors of the economy to prisoners," he explained.

Mr Harrington said that although there were no minimum requirements in terms of capital investment for foreign investors in Zambia, the Investment board uses certain guidelines for an investment application made by a foreign investor and that the value of investment, the pledged job creation and sector were of paramount importance.

The Zambia Association of Chambers of Commerce and Industry (ZACCI) says it is not obligatory for an investor to go through the Zambia Investment Centre and that if the investor is complying with the laws of Zambia, there should be no restriction on the type of business in a liberalised economy. "If the business is genuine, it should not be an issue provided taxes are paid, immigration laws are respected and employment is created for Zambians," said ZACCI Chief Executive Peter Armond.

A Chinese investor running a clothing shop in Lusaka's second class trading area, Kamwala, though he agrees that foreign investors should invest in big big businesses like farming and manufacturing to create employment, there is nothing wrong with them getting involved in trading. "I cannot say it is not alright to get involved insmall scale trading because we bring in something which is not found in Zambia," said Wang Qi Liang.

"I think running shops, butcheries or bakeries is just one of the many lines of businesses. We should not confine these to Zambians," Mr Wang said. "We are talking about competition. Everybody should be involved."

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