Absa Bank Zambia CFO Venus Hampinda, left, and Ceasar Siwale of Pangaea Securities outline how to tap into investment opportunities in Zambia.

Africa is often seen as a battleground for competing development models, and Zambia provides a case in point. 

The copper-rich country just north of Zimbabwe, blessed with abundant water to accompany its vast mineral wealth, has seen itself pulled in many directions as the U.S., China and other powers posture for influence on the continent. 

Even more fundamental than how it navigates these international ties, however, is the lingering question over whether it made the right choice in picking capitalism in the early 1990s, when the “wind of change” blew a wave of privatization across Africa, Zambian Ambassador Chibamba Kanyama said Sept. 7 in Atlanta. 

Mr. Kanyama provided the keynote address at Banking on a Better Future: Zambia’s Embrace of Enterprise with Equity, the de facto kickoff to a Zambian diaspora conference in Atlanta focused on wealth building through entrepreneurship. 

In a country with an average age of 18 and youth unemployment approaching 20 percent, the ambassador said, many are angling for a return of state intervention, hearkening back to the socialist leanings that guided Zambia’s economy after independence from British rule in 1968. Mining and other core industries were quickly nationalized, with the state loosening its grip only decades later. 

Watch a video teaser of the event above.

“It was only in 1991 when there was a complete change of the economic landscape of the country where we became flat private enterprise,” Mr. Kanyama said during the Global Atlanta-hosted event at Miller & Martin PLLC. “So it called for deregulation of a number of issues to allow for private capital to come into Zambia, and that is the time we privatized over 200 state-owned enterprises, over 200 of them.” 

That includes a brewery that became a Coca-Cola bottler where the ambassador worked for five years. 

“And that’s how I came to know Atlanta, because I had a lot of dealings with their Atlanta office,” he added. 

Across Africa, whether in Kenya, South Africa or in the West African nations that have seen recent coups d’etat, the viability of capitalism as a model — and democracy as its enabling form of government — has come under attack, he said. 

“It’s the young people today who are changing and driving a new narrative for self-determination, owning our own wealth, doing away with the private sector. This is the time you’re hearing across much of Africa, people are saying, ‘We don’t want anymore this democracy; democracy is failing to deliver.’” 

For representative government to endure, he suggested, it needs a better social compact with the governed that can only come when citizens see it driving prosperity. 

His comments could be seen as a paraphrase of what Zambian President Hakainde Hichilema, elected in 2021, said to the United Nations in late 2022 and later relayed in a Washington Post article

“You can’t eat democracy. Human rights may sustain the spirit, but not the body. Particularly in young democracies like mine, governments must deliver economically if they are to retain the people’s consent.”

Zambian President Hakainde Hichilema

As investment floods into Africa, the ambassador said, companies should help strengthen the communities where they work, saying goodbye to the prior era of extractive industry. 

“Countries are beginning to ask questions: What do we do next? And that’s the question that we’re asking in Zambia. We as a country have remained consistent on one thing: irrespective of potential dangers … we’ll continue to have faith in the private sector,” Mr. Kanyama said, adding an admonition for companies: “But do better, do better.” 

Now is the time for Zambia to make its pitch as an inviting place that where investors can minimize risk, offering more than what some have cited as Zambia’s “biggest endowment”: its smiling people.

“But smiling doesn’t make us money,” he said to more smiles and laughs from the audience, noting that investors seek solid returns and that Zambia is competing not only with countries around the world, but also U.S. states like Georgia that offer their own incentives. 

“We want to ensure that we give you better returns and assure you that there will be no policy reversal,” he said. 

Zambia, he added, will avoid seizing private assets and will make sure commercial disputes are handled in accordance with the law. 

It might be a tough sell for American firms, given their lack of knowledge about Zambia, he conceded.

Its recent performance could also raise questions. During the pandemic, Zambia defaulted on its sovereign debt. This June, the Hichilema administration landed a deal to restructure more than $6 billion in debt payments with creditors, including some $4 billion to China. 

While Zambia offers more than copper, mines employ tens of thousands of Zambians, and fluctuations in the metal’s price can substantially impact government revenues. 

But amid the nascent global transition to electric vehicles, which will require massive new sources of critical minerals around the world, Zambia may have the opportunity to rethink how it uses resources to drive the rest of its economy. 

The Biden administration has taken an interest, presumably to counter China. After the African Leaders Summit hosted by President Biden last December, the U.S. State Department announced a trilateral agreement with the Democratic Republic of the Congo and Zambia on responsible sourcing of battery minerals. 

Meanwhile, a Chinese firm declared this week that it would up its investment by $400 million to increase copper production in Zambia, reflecting how the country is working with rival powers at the same time. 

Ceasar Siwale, CEO ọf Zambia-based Pangaea Securities, said his firm is setting up a critical minerals fund with investors out of Germany, including some backing by the German government.

“We started with a target of $50 million. We’re now debating whether we’re being a little bit too cocky to go to one and a half billion dollars into that fund,” he said during panel discussion at the event.  

Pangaea is also working on an infrastructure fund with investors from Dubai and on reinsurance projects backed by British funds, the interest more reflective of Zambia’s growth trajectory in the last two decades than the debt woes that really hit in 2016-17. 

When Mr. Siwale started with the firm that would become Pangaea in 2001, per capita GDP was $250. In 10 years, it had jumped to more than $2,000, a tenfold increase in a decade. His first transaction was a $1 million rights issue; now the firm doesn’t look at anything less than $10 million. 

“Our sweet spot probably sits at about $30-$50 million, so the economy has transformed over the last 20 years or so, and definitely that growth has come through,” he said, conceding that the base was still low compared to the U.S. and Europe. 

Absa Bank Zambia Chief Financial Officer Venus Hampinda, also on the panel, said access to capital remains a hindrance to growth, especially for small and medium-sized companies. 

The bank is now working on a variety of public-private partnerships focused on job-creation, including using a $20 million USAID grant to help reduce risk and lower the interest rates it charges on loans to enterprises run by young people and women. 

In her remarks, Ms. Hampinda outlined the tax structure in Zambia and various incentives designed to entice outside investors.

Fortune, she implied, seems to favor the brave, with Absa Zambia’s average return on capital of over 40 percent — the highest across the 15 countries where the bank operates. 

“That’s a return that you will not get so easily, so it just goes to show that we are working in an environment that has economic stability,” Ms. Hampinda said. 

The event at Miller & Martin included a video address from Atlanta Mayor Andre Dickens, whose Year of the Youth program aligns well with the objectives of many African nations focused on fostering prosperity for the largest segment of their populations. 

Global Atlanta organized the event in partnership with Zambians Promoting Leadership in America, an Atlanta-based organization that invited the ambassador and the other panelists to speak at its three-day summit: Shifting Mindsets for Entrepreneurial Success

As managing editor of Global Atlanta, Trevor has spent 15+ years reporting on Atlanta’s ties with the world. An avid traveler, he has undertaken trips to 30+ countries to uncover stories on the perils...