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ZAMBIA sees foreign direct investment doubling in 2008 to US$3 billion, with Investments expected to push up Gross Domestic Product to 7.5 per cent in 2008 – up from a previous forecast from of 7.0 per cent.

The growth would create about 100,000 new jobs.
Government also expects that investment dependence on China would be diluted by new investments from India, Malaysia, South Africa and emerging African powerhouse Nigeria.

Minister of Commerce, Trade and Industry, Felix Mutati, said on Friday new investments would push growth in the copper-rich country to 7.5 per cent in 2008.

“The target of US$3 billion in FDI will be achieved by the end of the year,” he told Reuters by telephone from the capital Lusaka. “There is not a singular but a divergent source of funds, giving us a good investment balance. We now think economic growth this year will be around 7.5 per cent.”

Zambia’s Treasury says the country received US$1.4 billion in foreign direct investment in 2007.
The main limiting factor was the country’s poor road infrastructure and limited power generation capacity, he said.

Mr Mutati said the country would aim to invest to improve that, with India’s ER Engineering building a US$500 million coal power plant as well as evaluating coal deposits.

Other Indian firms would invest millions of dollars in manganese mining, agriculture and agro-processing, Mutati added.

Other potential or confirmed investments included South African-backed sugar production, Nigerian banking and cement production and a Malaysian factory making mobile phones for the wider southern African region, he said.

The majority of the US$3 billion was already in the country, he said.

Earlier in the week, Zambia’s Minister of Finance and National Planning, Ng’andu Magande, told Reuters he was unfazed by worries over a recession in the developed Western economies because the country – like much of the rest of Africa – was now looking primarily to the east.

Mutati said a sixth of the investment would likely come from Nigeria, its economy riding high on record oil prices.

Nigeria’s Access Bank was last week granted a licence to operate in Zambia.

“Riding on the Access Bank initial investment of US$7.5 million, around US$500-million in new investments from Nigeria will come in,” he said.

“A team of Nigerians will be in Zambia next week to discuss investments in cement production, Manufacturing of packaging materials and haulage of goods.”

In another example of Africa to Africa investment, he said a consortium of Zambian and Kenyan investors were setting up an edible oils plant.

A South African firm was starting an explosives plant to feed the growing mining industry, he said, while Zambia Sugar – a Lusaka-listed unit of South Africa’s Illovo, itself a unit of Associated British Foods – had announced a US$205 million factory expansion plan.

The world’s largest cement manufacturer Lafarge will commission a US$150 million cement plant in July.

China is expected to invest an initial US$300 million of an eventual planned US$900 million in an economic tax free zone for Chinese firms.

Mutati said taxes generated from the new investment would be used for poverty reduction. Around 64 percent of Zambia’s 12-million people currently live in poverty.