COUNTRY IMPRESSION

ZAMBIA

Value Chain Solutions (VCS) reengineered various agriculture and food value chains on an end-to-end basis in Zambia – from input supplier to consumer (local and exports). Following several visits, we wanted to highlight some impressions of Zambia with the focus on a few key issues and trends.

The Zambian consumer is currently under pressure. Visits to the trade confirm economy brands generally hold their position, whilst premium brands see a decline in demand.

Premium brand consumption pockets exist in some areas in Lusaka and some other key consumer hubs in Zambia, but my impression is that these areas have become more isolated compared to a couple of years ago. Interesting enough, despite pressure on consumer income, consumers remain sensitive to product composition especially in the case of discretionary products; Agriculture materials used as an input and deemed as inferior by consumers don’t sell easy except if branded in a very clever way. Packaging remains a key distinguishing factor in all brand categories.

Lastly, route to market tactics are changing rapidly in the main consumer hubs given economic pressures; it is therefore critical to review and reshape these on an ongoing basis to ensure products are relevant, available and affordable at all times.

Given the general economic pressures experienced in Zambia, the political economy is changing and has become very unpredictable. It reminds us a lot of the early 2000s, except that economic growth is lagging far behind compared to what was experienced then. This implies that relationships with government and some of the key private sector players top the list in terms of getting business done in Zambia. A key impact of this trend is that labour legislation has changed significantly during the past two to three years and especially during the past couple of months. This makes it very costly and onerous to firstly employ people, but also to expand operations.

Expect government involvement in agriculture and food markets to increase as we approach elections in 2021 and expect the unexpected.

Climatic conditions in Zambia were very contrasting this season. We first visited the far north bordering the DRC and Tanzania. Crops generally looked good and yields and product quality were expected to be reasonable. As we moved to the central parts, conditions were still fair but water availability for irrigation was a concern if early rains failed to be timely and sufficient. Moving south and west of Lusaka, conditions were critical and in most cases crop failure was the norm. Imports of some key crops or products will therefore be required until the next satisfactory crop can support food security.

New investment and industry expansions are not happening at this stage, or atleast only at a very small scale. It is clear that new investors are watching and waiting, whilst existing players are only doing the necessary.

In some instances, players are either scaling down or fundamentally reorganising business to ensure sustainability. Opportunities however still exist and will remain in future, given the natural agriculture potential of Zambia. Whether these opportunities are utilised, however, will depend on the ability to set up or reengineer value chains that are globally competitive to allow exports of key products, whilst managing the political economy of Zambia and the related risks.