Trade & Investment

The Trade and Investment unit conducts research on domestic and international trade policy issues. It also conducts research on the legal and regulatory environment for private sector business, particularly MSMEs. The main objective of the unit is to strengthen Zambia’s capacity in identifying suitable domestic trade reforms. The unit further supports the development of appropriate investment policies while encouraging regional cooperation and international trade policy dialogue.


For 2017 the unit will focus on the following studies:

a) Zambia’s changing trade landscape: policy ramification for economic diversification

In 2016, Zambia has witnessed the drafting of four key policy documents that will have significant ramification for trade, investment and eventually economic diversification: The drafted documents are; standalone Industrial Policy, National Trade Policy, first ever Export Strategy and The Seventh National Development Plan centered on economic diversification.

The study on Zambia changing trade landscape: policy ramification for economic diversification is proposed to map and highlight the critical inter-linkages of these documents, the nature of complementarities they will have on economic diversification, and the unique role to be played by each one during programme. In addition, the study will further highlight the pieces of empirical evidence these policies have embraced and areas where more evidence is required. It will also expose challenges faced in formulating and forwarding trade and industrial policy regime in view of distortions caused by uneven distribution of “voice” in the trade lobby structure. The paper will end with a set of recommendations on how the Ministry of Commerce, Trade and Industry can reposition itself to take key leadership in the realization of economic diversification under the new multi-sectoral approach proposed in the Seventh National development Plan.

The study will be conducted from Q1-Q3 of 2017.

b) Determining the Appropriate Supply Structure for Zambia’s Electricity Industry

ZIPAR seeks to undertake a study that reviews Zambia’s current electricity supply industry in comparison to international best practice. This study is borne out of the need to address the power crisis the country is facing that has triggered unparalleled power cuts to all consumers. Although the electricity industry was liberalized in 1995 to allow for private sector participation, the industry has failed to attract the necessary private sector investments required to diversify energy generation sources and meet the increasing demand for power. Anecdotally, Zambia’s electricity industry still remains as semblance of a monopolistic industry dominated by one large vertically integrated state-owned corporation – ZESCO Limited responsible for the generation, transmission, distribution and supply of electricity. Concerns have been raised by various stakeholders regarding the current market structure and regulatory framework of the industry and how this could be impeding investments into alternative sources of energy. The country is currently facing an unprecedented power deficit largely as a result of relying solely on one source of energy that is highly susceptible to climate change. This poses risks to economic growth given the positive correlation that exists between electricity supply and economic growth.

This study therefore seeks to map Zambia’s current electricity supply industry with a focus on regulation and competition in the generation, transmission, distribution and supply value chain. The study will investigate any legal, institutional, organizational or market factors that could be impeding competition and increased private sector participation in the industry. This will be achieved by investigating the constraints faced by Independent Power Producers (IPPs). In addition, the study will draw on successful market reforms that have been undertaken in the region and other comparable global countries. This overall objective of this study is to influence Government policy and contribute towards the development of a competitive market-driven electricity supply industry that promotes private sector participation and efficient, reliable, competitive energy supply responsive to market demands.

This study has been rolled over from the year 2016 and is expected to be carried out in the second and third quarter (Q3) of 2017. Funding for this activity will be derived from GRZ.

c) Growth and Development in the Cosmetics, Soaps and Detergents Regional Value Chains

Historically, growth in the SADC region has largely been driven by mining and other resource related activities which poses threat to sustained economic growth given the risks associated with international commodity price shocks. To ensure sustained, inclusive economic growth in the region and for Zambia in particular, it is imperative to diversify towards manufacturing that is more resilient to external shocks. Light manufacturing, which has lower barriers to entry, therefore becomes an important stepping stone toward economic transformation. It is in this regard that ZIPAR is collaborating with the Centre for Competition, Regulation and Economic Development (CCRED) based at the University of Johannesburg to undertake a study aimed at understanding industrial development of the soaps and detergents/hair preparations value chains in South Africa and Zambia. Trade date shows a trade deficit for $536m for cosmetics & $667m for soaps and detergents in the SADC region. This presents an opportunity for the region to meet this demand internally rather than imports from global markets

Therefore, this study seeks to highlight the potential for mutually beneficial industrial growth and employment opportunities that can be derived for South Africa and Zambia from this value chain. Specifically, the study aims to analyse the performance and constraints in the soaps and detergents and hair preparations regional value chains and to identify collaborative industrialisation strategies for the chemicals value chains across the two countries. This research is premised on a series of regional value chains studies being coordinated by Trade and Industrial Policy Strategies (TIPS) of South Africa aimed at promoting industrial development in line with SADC’s integrated development agenda. This work is aimed at informing Government policies on industrialisation in both Zambia and South Africa. The study will therefore inform the trade authorities (Ministry of Commerce Trade and Industry).
This study is a continuation on on-going work and is expected to be finalized in quarter one (Q1) of 2017. Funding for this activity will be derived from BDU.

d) Growth and Development in the Sugar to Confectionery Value Chain

Although South Africa is a relatively more sophisticated industry and is perceived as the ‘gateway to the region’, the country has recently experienced structural shifts with sharp increases in contributions of the services industry to GDP while the manufacturing industry contribution to GDP and employment has significantly decreased over time. On the other hand, Zambia’s export profile has remained largely dominated by metal commodities, namely copper, that are susceptible to international commodity price shocks. Zambia’s economy has equally experienced a shift towards the services industry but perhaps without achieving the industrial development required for sustainable economic growth and employment creation. Both countries are therefore faced with a challenge on how to significantly increase their manufacturing base, create employment and sustained economic growth.

Agro-processing, specifically in the sugar-to-confectionery value chain, is important for industrial development in both South Africa and Zambia. First, both countries are large net exporters of sugar, with Zambia being the lowest cost producer of sugar in the region. At the same time, there is a large trade deficit in downstream confectionery products which is a substantial category of processed food. As such, these countries are well-placed to exploit these opportunities to develop relatively low to medium technology value added products in the sugar and baked confectionery industries. This study therefore seeks to understand industrialisation in the context of the sugar to confectionery value chains in South Africa and Zambia. Specifically, the study seeks to develop a shared understanding of the challenges impeding the expansion of downstream industrial activities in South Africa and Zambia and to analyse the performance and constraints of the sugar to confectionery regional value chain and the potential for upgrading. Similarly, ZIPAR is collaborating with the Centre for Competition, Regulation and Economic Development (CCRED) based at the University of Johannesburg in undertaking this study. This work is aimed at informing the Government policies on industrialisation in both Zambia and South Africa.

This study is a continuation on on-going work and is expected to be finalized in quarter one of 2017. Funding for this activity will be derived from BDU.

e) Other Potential Research Works

The Role of Supermarkets in Industrialization and Job Creation: in 2016, ZIPAR finalized a study on the Expansion of Regional Supermarkets in Zambia and the Implications for Local Suppliers. The objective of this study was to investigate the factors that determine participation of local processing firms in supermarket value chains. In addition, the study sought to investigate the constraints faced by firms that limit their participation and Zambia’s potential to fully harness the opportunities for industrial development, job creation and export growth that can be derived from the integration of local firms in supermarket value chains.

Based on the findings of the study, ZIPAR intends to develop a short policy paper that informs Government on the constraints faced by local suppliers that inhibit their increased participation in supermarket value chains and the plausible solutions to these constraints. Specifically, the objective of this policy paper will be to build on the various policy measures recommended in the report that are aimed at developing the supplier capabilities of local processing firms and facilitating their effective integration into supermarket value chains and regional markets. This will be achieved by developing more detailed and actionable policy recommendation aimed at contributing towards the promotion of agro-processing and light manufacturing and employment creation in line with Government’s objective to diversify and industrialize the economy.

This work is expected to be carried out in the third and fourth quarter (Q4) of 2017 (time permitting) and funding for this activity will be derived from GRZ


Trade & Investment Research Team
  • Joseph Simumba
  • Francis Ziba
  • Mwanda Phiri