Tuesday, September 22, 2020

The Highway to Electric Vehicles

 

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An electric vehicle revolution is underway as a more eco-conscious world slowly but steadily moves away from petroleum and diesel-fuelled vehicles to rechargeable ones. Electric vehicles (EVs) offer a zero vehicle emission alternative to the combustion engine, thanks to recent global investments and advances in battery technology.

Auto industry experts anticipate that the next generation of EVs is likely going to deliver new and thrilling experiences. For this reason, a growing number of Chinese brands have set their sights on the African automobile chessboard. From Great Wall Motors to Chery and Fonton, there is a long list of Chinese and other car manufacturers that have launched car and truck assembly lines on the continent with the aim of making breakthroughs in science and technology, as well as producing energy-saving, environmentally friendly and intelligently interconnected automobile products.

With over 20 million passenger vehicles manufactured in 2019 and a 3.2-percent year-on-year growth, China remains the world’s largest car manufacturer. Over the years Chinese automakers have been picking up speed, according to statistics from the China Association of Automobile Manufacturers (CAAM).

Game changer

Global oil prices have dropped dramatically in recent months. The long-term reasons for the freefall are increased US shale oil production and greater use of renewable fuels around the world. More recently, the coronavirus pandemic has also contributed to prices dropping even lower. The Organization of Petroleum Exporting Countries (OPEC) has been trying to cut production to prop up prices, but the effort is increasingly problematic.

For many, this is an exciting opportunity to move to electric vehicles and to enjoy a vastly different driving and ownership experience. With electricity supplies increasingly being delivered from renewable sources, electric cars offer environmental benefits over traditional fuel-burning engines too. This is increasingly being recognized by governments around the world with the availability of a wide range of incentives to reduce purchase costs and car taxation issues.

As the yearning for EVs increases, experts say it is high time Zambia sets up an EV battery manufacturing plant, a move that has massive potential to create jobs and other support sectors. This is relevant to Zambia because electric vehicle batteries require cobalt, which is a by-product of copper, something which Zambia possesses in abundance.

Recently, a lawmaker and former energy minister, Kapembwa Simbao, moved a motion in parliament that urged the government to phase out gasoline-driven vehicles and replace them with electric ones by 2030.

“This motion is driven by the fact that there has been a paradigm shift in the transport sector that will seriously affect the way we do business in the future. Before our own eyes, we are witnessing a shift from fossil, diesel and petrol-driven vehicles to electric driven vehicles,” Simbao stated.

It is no secret that in about 30 years’ time fossil fuels will run out, with oil reserves dwindling due to the rising global population that has continued to induce a growing demand for energy. The growing demand has repercussions for our future. It is estimated that oil will run out by 2052, while gas is expected to be depleted by 2060, and coal is predicted to last till 2090, according to the Millennium Alliance for Humanity and the Biosphere (MAHB), a global civil society organization that addresses the interconnections among the greatest threats to human well-being.

Environmentalists also argue that as people become more environmentally conscious, it is high time Zambia walks the talk by investing in battery technology for EVs on the continent. Lusaka based economist Mambo Haamaundu believes that there are a lot of areas where the country can do very well but hasn’t applied itself properly.

“We wish we can exploit this opportunity and see how we can utilize copper and its bi-product [cobalt] in enhancing our future economic prospects. Even the wiring of vehicles needs copper and this is the way to go as a technology for electric cars is ripe,” Haamaundu told Nkwazi.

The economic and environmental benefits of EVs plus the fact that fossil fuels will inevitably run out, there is a strong case for many people in the country to transition to EVs.

However, this begs the question, does Zambia have the ability to invest in an industry where it can utilize its raw materials to manufacture or assemble products needed in this yawning market?

EVs can fuel job creation

The success of Toyota Motor Corporation in Africa and Zambia in particular has shown how firms with the right product and strategic pricing can influence socio-economic growth in any society they operate in. This has, in turn, created more jobs and businesses such as car dealerships, car hire companies, and intercity transport services that have sprung up.

In most Zambian towns, busy streets are awash with Toyota vehicles, a sign that shows how the giant Japanese vehicle manufacturer has over the years been transforming the lives of local entrepreneurs and other residents.

“As we approach 2050, our aim is to develop sustainably together with society. In order to do this, we intend to reduce the environmental burden attributed to automobiles to as close to zero as possible, while also contributing positively to the earth and its societies,” Toyota Motor Corporation President Akio Toyoda recently said.

Japhet Banda, 42, is a car broker working along Lusaka’s Independence Avenue who shared his views with me. “The technology of electric vehicles is welcome and once implemented, our sector will really benefit in terms of job creation through support service industries of batteries and reduction of import duty on vehicles,” Banda stated.

Undeniably, sometimes what people need is a little head-start, not a handout and the electric vehicle industry can be a game-changer in terms of Zambia’s socio-economic emancipation.

Sunday, September 20, 2020

Devastated businesses

  – by Derrick Silimina

Nowadays

Ben Tembo normally earns his livelihood selling second-hand clothing in Lusaka, the Zambian capital. This is an informal business that is popularly known as “salaula”, and it has been hit hard by the impacts of the Covid-19 pandemic.

The background is that salaula merchandise largely consists of used clothes that people in rich countries have discarded. Often, they do not simply throw away their old trousers, shirts, and sweaters, but hand them over to charities, which in turn sell them on to export companies. Such goods, however, are no longer being delivered to Zambia because borders were closed to prevent the spread of the novel coronavirus.

Tembo says that many businesses have already collapsed. He worries: “If this global pandemic persists, how are we going to pay our bills?”

According to a report published by the International Labour Organization (ILO) in 2018, not quite 90 % of Zambia’s labor force works in the informal sector. It means that businesses are not registered, do not pay taxes, and are hardly regulated. It also means that staff does not enjoy social protection. Things are similar in most sub-Saharan countries. Small-scale agriculture and retail markets are typically informal, and wholesale markets are often informal too.

In many places, policy measures meant to limit the spread of Covid-19 have had a considerable impact on the informal sector. The reason is that income-generating activities are made harder or even impossible, and people have to do without the daily earnings they and their families depend on.

To the extent possible, people, therefore, keep on working. Gertrude Mbao is an example. She knows she is at risk of catching the disease. She gets up at 4 o’clock in the morning and goes to a crowded wholesale market, where she procures vegetables for the small retail business she runs. She then spends the day serving customers, which means yet more contacts with people. “I have no choice but to continue trading at the market despite Covid-19,” she says. “I depend on this small business to feed my children.”

Some consider her lucky. Her work is essential and can go on. By contrast, restaurants and bars have had to close. The implication is that the people who used to work there have lost their livelihoods. Compounding matters, Zambia was experiencing an economic downturn even before the pandemic started. Government debt was soaring, the national currency depreciating, and inflation accelerating. Lockdown policies and fear of the disease have further slowed down economic activity.

Jack Zulu runs a liquor shop near an important bus terminal. His business is still open, but it has been devastated nonetheless. “My daily livelihood has been crippled,” he says. He used to have revenues worth the equivalent of about $ 250 on a good day but now struggles to rake in that much in an entire month.

The disease is still spreading in Zambia. According to the health ministry, the country had registered almost 13,000 cases by 7 September, and almost 300 patients had died. Many people feel, however, that the economic pain caused by preventive measures is incommensurate with the risk.

The Jesuit Centre for Theological Reflection (JCTR) has appealed to the government to ensure that disease-related restrictions do not make poor households face starvation. This Catholic outfit does advocacy work apart from research and education, promoting social justice in Zambia and Malawi. However, Zambia’s government is cash-strapped. Decisions concerning how to protect the people from a disease that is still not well understood and in safeguarding their livelihoods are obviously very difficult.


Derrick Silimina is a freelance journalist based in Lusaka. He focuses on Zambian agriculture and sustainability issues.
derricksilimina@gmail.com

Tuesday, September 15, 2020

A pivotal time for Zambia’s economic future

 

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Zambia is facing a number of macro-economic challenges but has set itself on a path back to economic stability and growth.

The depreciation of the kwacha which triggered inflationary pressures, sluggish credit growth, decreased agriculture output arising from the poor rainfall, and debt servicing burdens negatively affected the overall performance of the economy.

On the global front, mounting geopolitical tensions between the US and China and the rise in oil prices have also contributed to Zambia’s economic slowdown.

It is for these reasons that the 2019 National Budget theme, dubbed “Delivering Fiscal Consolidation for Sustainable and Inclusive Growth” was clearly aimed at stimulating Zambia’s declining economic performance through domestic resources mobilization.

2019 Economic Performance

Initially projected at around 4 percent, economic growth in 2019 slowed down to around 2 percent, compared with 3.7 percent growth in 2018.

In his maiden budget speech, Minister of Finance Dr. Bwalya Ng’andu highlighted that although revenues and grants exceeded targets by 9.1 percent in the period from January 2019 to August 2019, expenditure exceeded targets by 3.4 percent.

Dr. Ng’andu noted that this was mainly due to depreciation of the kwacha and under-subscription of government securities resulting in increased debt service costs which left an overall budget deficit of 6.5 percent of GDP on a cash basis.

According to the Bank of Zambia, inflation remained broadly in line with the 6 to 8 percent target range in the earlier part of 2019. In the second quarter, inflationary pressures built up, resulting in inflation breaching the upper bound of the target range in May 2019 at 8.1 percent. By the end of August 2019, inflation rose further to 9.3 percent. This was largely on account of higher food prices and the pass-through effects from the depreciation of the kwacha against the US dollar.

To counter inflationary pressures, the Bank of Zambia adjusted the policy rate upwards to 10.25 percent in May 2019 from 9.75 percent in December 2018.

Growth has further been adversely affected as commodity prices had generally been lower over the first eight months of 2019 due to a fall in global demand. Copper prices averaged US$ 6,091 per metric tonne compared to US$ 6,723 per metric tonne over the corresponding period in 2018. Over the same period, crude oil prices averaged US$ 63 per barrel compared to US$71 per barrel.

In addition, tight liquidity conditions mainly attributed to external debt servicing and as reflected in the accumulation of domestic arrears, have contributed to slower economic growth.

Notwithstanding the general slowdown in the economy, the service sector has however performed favorably, especially wholesale and retail trade, information and communication technology, and financial services.

Non-traditional export earnings increased by 17.2 percent to US$ 1.1 billion from US$ 911 million over the first half of 2018. This outturn was attributed to higher exports of gemstones, cement, lime, sulphuric acid, and sugar.

But in terms of debt position, the external debt stock at end of June 2019 increased to US$10.23 billion from US$ 10.05 billion at the close of 2018. This was mainly on account of disbursements on existing loans. The rate of debt accumulation at 1.9 percent was lower than the 7.6 percent recorded in the corresponding period in 2018.

2020 Economic Outlook

The 2020 national budget, under the theme ‘Focusing national priorities towards stimulating the domestic economy,’ is clearly aimed at dealing with the economic challenges the country is currently facing.

In a bid to achieve more with less, the tight fiscal space for 2020 requires refocusing resources on priority areas of economic diversification and job creation.

“We are confident that economic diversification and job creation can be attained with continued public and private investments in the agriculture, tourism, mining, energy and manufacturing sectors,” Dr. Ng’andu stated during his 2020 budget presentation.

Policy Monitoring and Research Centre Executive Director Bernadette Deka Zulu shared recently in response to the 2020 national budget reveal: “With relation to agriculture, we call for scaling up of the Farmer Input Support Program with more priority being given to the E-voucher as opposed to Direct Input Supply (DIS) so as to promote agriculture diversification.”

With decreased electricity output over the years, which has negatively affected the economy, the government has plans in place to upgrade its power plants and increase output. Power projects such as Bangweulu and Ngonye Solar Power plants generating a combined total of 90 megawatts have been completed and are operational. Further, the construction of the 750 megawatts Kafue Gorge Lower Hydropower Station Project and upgrading of Lusiwasi Upper Hydropower Station to 15 megawatts are expected to be completed in 2020. The upgrading of Chishimba Falls Power Station from 6 megawatts to 15 megawatts will commence in 2020. In addition, the developer of the 2,400 megawatts Batoka Hydropower Plant between Zambia and Zimbabwe has been identified.

It’s also encouraging to note that under the National Industrial Policy, the government aims to promote export-oriented industrialization as progress is being recorded in the export of products such as cement, honey, and detergents. In line with the National Local Content Strategy, these products are being manufactured from local raw materials.

Economic priorities for 2020 include creating a foundation for improved economic management, sustainable power generation, and safeguarding people’s welfare through consistent public investments in education, health, and agriculture. These all fall in line with the country’s aspirations outlined in the Seventh National Development Plan (7NDP).

Monday, September 14, 2020

JICA Plays Significant Role in Zambia’s Development

 AUG 25, 2020

SNA (Lusaka) — Japan has become a formidable pillar in Zambia’s development, and its influence is felt in the fields of business investment, training, and technology. Some have argued, however, that the criteria for accepting trainees and awarding grants need further clarification.

Japan’s official development assistance to Zambia is delivered mainly through the Japan International Cooperation Agency (JICA). Since it began its activities in 1968, it has been an extraordinary success story that effectively triggered the transformation of the Zambian economy.

JICA’s training programs have enabled many Zambians to go to Japan and participate in training courses. Each year, about 100 to 150 Zambians are trained in the Asian country, and about 3,000 more Zambians receive some form of training inside their home country. JICA’s investments in Zambia have been worth about US$2 billion since its operations began.

“Since the purpose of our cooperation is to help Zambia achieve its Sustainable Development Goals,” Japanese Ambassador to Zambia Ryuta Mizuuchi said recently in Lusaka, “I think we have to take it seriously.”

He added, “One thing that I clearly heard from Republican President Edgar Lungu himself, possibly in this context, was about Zambia’s quest to strengthen the agricultural sector with a view to diversifying the economic structure, and rectifying the overdependence on mining.”

Zambia, Africa’s second-largest producer of copper, is highly dependent on mining as its major productive industry. Mining contributes 78.4% of total export value, and 31.4% of government revenues, according to the latest data from the Extractive Industries Transparency Initiative (EITI).

The Japanese envoy also expressed interest in exploring the potential to achieve a sustainable human resource development chain within Zambia. “Personally, I wish to see a ‘strategic thrust’ in our cooperation with Zambia, in such a way that, for instance, a schoolgirl with excellent talent would be efficiently supported by a JICA scheme in the field of gender, and promoted further to receive Japanese language studies at the University of Zambia, which is already assisted by volunteers who teach Japanese.”

JICA Zambia Office Chief Representative Kazuhiko Tokuhashi affirmed that the agency has been the bridge linking Japan and developing countries. “The actions that drive us as JICA are commitment, working together with the people, thinking and acting together strategically with broad and long term perspective, bringing together diverse wisdom, resources, and innovation that will bring about unprecedented impact,” he asserted.

With more than 4,000 trainees now having been sent to Japan through JICA’s training programs, the ultimate aim is to realize the Vision 2030, making Zambia a prosperous middle-income country by that year.

The Zambian government has commended Japan for being an “all-weather friend” in providing assistance in various economic sectors of the country.

Director of Vocational Education and Training Alex Simumba recently stated, “We will continue to engage in partnerships aimed at empowering our people; we cannot develop the country alone without the support of our partners. Since the launch of the Seventh National Development Plan, our role as government is to scout for partnerships.”

The Zambia JICA Fellowship Association (ZAJIFA), an alumni organization, has been developed as a way to maintain personal relationships between ex-participants and to ensure continued knowledge sharing among various key organizations within the private and public sectors.

ZAJIFA President Joseph Mulenga said that the association plans to shake things up and to get more members involved in projects, as well as to become more visible by having additional collaborations with Japanese counterparts.

Some ZAJIFA members recently made presentations on human resources development and the succession plan in an organization. One of the proposed plans is the development of floating photovoltaic technology on Lake Kariba, and a solid waste management improvement plan.

Although Zambia is endowed with natural water resources that offer significant opportunities to supply fish, the growth in aquaculture and fisheries have not matched the ever-increasing demand.

Current fish production is about 100,000 metric tons per annum, against the demand of over 180,000 metric tons, according to the Zambia Aquaculture Enterprise Development Project.

“Being accepted to attend a five-week course in Kyushu, Japan, in May 2017 was an opportunity of a lifetime,” stated Roster Kawala, a ZAJIFA member who recently attended a course on capacity building for entrepreneurs. “Upon my return, I have promoted aquaculture and encouraged the business community to participate by providing a market, cold storage facilities, and refrigerated transportation, among other things.”

However, some community members feel that, as much as JICA has been doing through its skills development and capacity building, a lot more still needs to be done in terms of publicizing its criteria for accepting trainees and awarding grants to deserving recipients.

“Some of us are still blank about JICA’s capacity building program, despite having belonged to cooperatives,” stated Amos Chanda, a social worker based in the Kafue district. “The JICA programs ought to be inclusive and embrace many, especially in rural areas.”

Farmer Jane Simate echoed Chanda’s concerns: “The recent Market Oriented Rice Development Project by JICA has so far been selective. The project has only captured a few rice farmers to equip them with skills on how they will become productive. What about other rice producers like myself who need the knowledge?”

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Powered by the Sun

At first glance, all is well. Zambia’s immense water bodies are propelling major hydropower plants to meet the nation’s electricity needs in a clean and renewable way. For many years, the country's electrical energy has been generated thanks to water flows from the mighty Zambezi, Kafue, Luangwa, and Chambishi Rivers.

However, the southern African country is now reconsidering its long-time dependence on hydropower, as chronic droughts cut production at its massive hydro dams. These droughts - caused by climate change - have in recent years lowered water levels, severely curtailing power production. Zambia has as a result seen electricity shortages estimated at around one-third of its total installed hydroelectric capacity. In 2019, water levels in the Kariba dam - one of the country’s key manmade dams - plunged to their lowest yet, falling to 10% of usable storage since 1996.

“This is probably the worst drought that has hit Zambia since independence in 1964,” Energy Minister Matthew Nkhuwa recently told parliament.

Chronic electricity shortages have affected everyone, from individuals to small businesses and huge corporations.

In addition to unpredictable weather patterns, a lack of investment in hydro projects has also caused complications. Even if rain does fall, power supply simply cannot keep up with demand from the mining, manufacturing, and agriculture sectors.

Zambia’s over-dependence on hydropower is unsustainable. Energy experts have argued that as droughts lead to prolonged blackouts, the country ought to be developing other renewable fuel sources, such as solar and wind energy.

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The Zambezi River.

In an effort to diversify its energy sources, Zambia is entering agreements with corporations looking to invest in its energy sector. Recently, the country signed an agreement with the IFC to develop two large-scale solar projects. Only a few weeks ago, Zambia’s state-owned electricity provider signed a contract with Power China to develop three solar power plants to feed into its national grid.

Less attention has been paid to wind energy, but several promising projects are underway. Construction of a 200MW wind power project in Katete, Eastern Province is expected to start in 2021. This is the first phase of the larger Unika 1 wind project and will be financed by private investors.

These impending improvements are good news for Zambia’s citizens. Chronic electricity shortages have affected everyone, from individuals to small businesses and huge corporations.

“These projects are badly needed and long overdue. Look! For me to make it in this sector, I need electricity to refrigerate my milk products and the rolling power blackouts have wrecked Zambia’s already fragile economy,” says Pamela Kabwe, a dairy farmer based in the Chisamba area.

The hope is that solar energy will contribute not just to a climate-resilient Zambia, but to a low-carbon continent.

“My business is down due to lack of electricity,” says Christine Chembe, the operator of a hair salon in the capital city of Lusaka. “The government should prepare adequately to invest in other renewable energies instead of always depending on hydropower from the Kariba dam, year in and year out.”

Local markets, shops, and chain stores are flooded with various solar appliances – from water pumps and radio sets to phone chargers and lights – as people try to take the problem of blackouts into their own hands. For David Chibuye, an entrepreneur at Kamwala market in Lusaka, business is booming. Ever since the power blackouts started, he tells me, he has been selling more solar-powered equipment. “I never used to have clients like these days. Nowadays, the demand for solar-related products has gone up here and, given more capital, I will make more money.”

But this is just the beginning. Zambia has an average of 2,000-3,000 hours of sunshine per year, waiting to be turned into energy. The International Renewable Energy Agency estimates that renewable energy capacity in Africa could reach 310GW by 2030, putting the continent at the forefront of renewable energy generation globally. When its larger solar energy projects are finished, both Zambia's natural environment and its citizens will benefit hugely.

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Solar power looks set to be the answer.

As it stands, only 4% of Zambia’s rural population has access to electricity. Mable Katongo, a pupil at a rural school in the Kaoma district of Western Zambia, talks to me about the issues she has studying late at night without electricity. “With examinations around the corner, it hasn’t been easy to study using kerosene lamps. They produce toxic fumes that are a danger to one’s health. But what can I do?”

Solar and wind power plants will decentralize power; they can be connected to micro-grids and supply currently underserved communities, like Mable’s. The solar power systems in action already are a testament to just how big an impact this will have on these communities.

Dennis Kandala of Salanga in Zambia’s Mumbwa district cannot believe how much his life has improved. After years of unreliable electricity, his village invested in solar lighting equipment, solar-powered boreholes and other equally efficient agricultural equipment.

“Solar energy is indeed the way to go. Look! It has improved my life after enduring years of living without electricity at my farm,” says Dennis with a huge smile.

Zambia’s Rural Electrification Authority is working towards providing electricity infrastructure to all rural areas in Zambia. Quality of life will greatly improve with increased production of and access to electricity. So far, the Authority has built over 400 standalone systems. Its first Solar Mini-Grid, completed in 2013, provides electricity for nearly 500 households, a school, a health center, and a harbor. Many more are on their way.

The hope is that solar energy will contribute not just to a climate-resilient Zambia, but to a low-carbon continent. The possibilities for infrastructure, agriculture, and the management of natural resources are very promising indeed.

“I never thought this would happen during my lifetime, and that I could have electricity in my house,” says Dennis, “I assumed perhaps this was going to happen during my great-grandchildren’s time.”

Derrick Silimina is a multi-award-winning freelance journalist based in Lusaka, Zambia. He focuses on Zambian agriculture and sustainability issues. In 2018, he won ‘Best Newspaper Feature Story’ at the Agriculture and Commercial Society of Zambia Media Awards.

Ringing up sales

  – by Derrick Silimina

Nowadays

Move over, Apple, Google, and Samsung: In Zambia, buyers of smartphones are flocking to buy the products of little-known Chinese competitors. The Chinese producers charge lower prices than the international giants and manufacture exclusively for export markets.

Along with gaining dominant market shares in Zambia, the Chinese firms – with brands such as Tecno, Itel, and Infinix – are also fostering the growth of Zambian smartphone retailers and accessories suppliers, thus helping to build the economy.

Across Zambia, city and town centers are full of brightly colored advertisements for Chinese smartphones. Scores of new retailers are springing up to meet the burgeoning demand.

“I started selling cell phones in 2016 with just a few handsets and a couple of accessories,” says retailer Obby Mbewe, owner of Mobile Tech, a shop in Lusaka’s sprawling town-center market. “Back then I struggled to sell a single handset in a day. But thanks to the arrival of so many Chinese smartphones with advanced features, things have changed.”

“Infinix phones are selling like hotcakes,” says retailer Teddy Kunda. “I sell more of these phones per week than any other brand.” A glimpse into Kunda’s shop on Lusaka’s Chachacha Road reveals a wide range of brands, most of them Chinese.

In Zambia, low internet access costs and mobile-telephony innovations are driving the demand for smartphones. The success of Chinese smartphones in particular shows how the right product at the right price can create a big market even in a country with limited purchasing power.

Shenzhen-based Transsion Holdings, whose brands include Infinix, Tecno, and Itel, is among the strongest Chinese contenders in the Zambian market. The firm sells phones only outside of China.

In Zambia, at least, Transsion is leaving global players like South Korea’s Samsung and the US giant Apple in the dust. According to International Data Corporation, the global provider of market intelligence for the IT industry, Transsion is among the top-selling mobile phone providers in Africa.

One clear success factor is the prices charged by Chinese manufacturers. While offering capabilities to rival those of international giants, Chinese smartphone brands such as Infinix Hot and Tecno Camon15 sell for between $ 50 and $ 200 depending on features.

Beyond modest prices, Chinese handset makers offer locally tailored features such as double-SIM card slots, which help users to avoid lapses in-network coverage; longer battery life, to compensate for power black-outs; and sharp camera technology calibrated to darker skin tones.

The success of Chinese smartphones in Zambia provides an important lesson for local suppliers and retailers, says Lusaka-based financial analyst Maambo Hamaundu. “You can be a giant today and a small boy will overtake you tomorrow and become a giant,” he says. “Chinese firms are successful because they understand the market and can satisfy the needs of the market. Our local entrepreneurs should also seize every opportunity.”


Derrick Silimina is a freelance journalist based in Lusaka. He focuses on Zambian agriculture and sustainability issues.
derricksilimina@gmail.com