Mutati warns of declining foreign investment

COMMENT - What a dumb (fill in the blank). Zambia has everything it needs to develop itself. People, land, minerals - it doesn't need anyone from abroad to develop it for the people of Zambia. What an incredible opportunity cost, that comes with the mentality of neoliberalism and reliance on foreign investment.

Mutati warns of declining foreign investment
Written by Nchima Nchito
Tuesday, December 16, 2008 8:27:44 PM

COMMERCE minister Felix Mutati has said Zambia will face a bigger
challenge attracting foreign investment next year than it did in the past year.

In an interview, Mutati said the expected decline in foreign direct investments (FDIs) sometime next year would pose a challenge to the government’s efforts in stimulating economic growth.

“These are the challenges we will be facing, we have to go out there and compete with other developing countries for foreign direct investments ,” he said.

Mutati attributed the situation to the current global economic crisis being experienced, with economies of developing countries also being affected.

“Many investors have had their fingers burnt in this crisis hence in the coming year, they will be very cautious about what investments they make,” he said. “This means it will be very competitive to win these investors to bring their money into Zambia”

Asked on what the government was doing considering that the effects of the economic meltdown were being felt in the country through the decline in copper prices leading to job losses in the mines and the devaluation of the kwacha against the dollar, Mutati said the government would engage in infrastructure upgrading to encourage investments.

“You have to understand that this is a global crisis and there is very little we can do for example to influence the copper prices. But also that this crisis has two sides to it,” he said.

Mutati said emerging markets were becoming the ideal risk spreading vehicles for investors.

“As developing markets, we are still providing reasonable returns on investments because we are not as hard hit as the developed countries by the meltdown,” he said. “For the first time, even countries like Korea have visited Zambia as potential investors.”

Meanwhile, Mutati has called for a favourable conclusion in the Economic Partnership Agreement (EPA) negotiations.

During a meeting organised by the Ministry of Commerce and attended by the donor community, Mutati said all differences hindering the progress of the agreement should be dealt with.

“Through your support as the donor community, an agreement could be reached. As of now, we operating with interim agreements so as not to disrupt trade,” Mutati said.

Mutati also called for further funding under the Aid for Trade programme.

“We see this Aid for Trade programme as a key development instrument promoting regional integration and a competitive environment,” he said.

Mutati cited the North to South corridor, which is a road originating from Tanzania through Zambia, as an example of the benefits of Aid for Trade.