VZCZCXRO8745
PP RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHLS #1246/01 3100648
ZNR UUUUU ZZH
P 060648Z NOV 07
FM AMEMBASSY LUSAKA
TO RUEHC/SECSTATE WASHDC PRIORITY 5124
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE

UNCLAS SECTION 01 OF 02 LUSAKA 001246 
 
SIPDIS 
 
DEPARTMENT FOR AF/S AND EB/CBA - DENNIS WINSTEAD 
COMMERCE FOR 4510/ITA/IEP/ANESA/OA 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV BEXP EAIR ZA
SUBJECT: ZAMBIA OCTOBER 2007 ECONOMIC ROUNDUP 
 
¶1. SUMMARY 
-- MWANAWASA HEADS TRADE DELEGATION TO SEATTLE 
-- CRITICAL FUEL SHORTAGE HITS ZAMBIA 
-- DIAMOND PROSPECTING VENTURE DOES NOT PAN OUT 
-- TRADING LICENSING ACT AMENDED 
-- THE ZAMBIA DEVELOPMENT ACT 2006 UNDERGOES REVISION 
-- NORTHERN PROVINCIAL AIRPORT CONSTRUCTION ON CARDS 
-- GRZ SUBMITS DRAFT TENDER BILL 
-- ZAMBIA TO PARTICIPATE IN THE KATANGA MINING EXPO 
 
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Mwanawasa heads trade delegation to Seattle 
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¶2. President Mwanawasa led a delegation of senior government 
officials and business leaders to Seattle after attending and 
addressing the 62nd United Nations General Assembly.  He was in 
Seattle at the invitation of the Initiative for Global Development, 
a network of business leaders that promotes policies to end poverty. 
 Mwanawasa also delivered a speech at the University of Washington, 
organized by the World Affairs Council.  Noting Zambia's economic 
reforms, plentiful natural resources, and his government's fight 
against corruption, he appealed for additional U.S. investment in 
Zambia.  The delegation also met with the Bill & Melinda Gates 
Foundation, PATH, Microsoft, Boeing, and Starbucks. 
 
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Critical fuel shortage hits Zambia 
----------------------------------- 
 
¶3. Zambia experienced a severe fuel shortage in the first two weeks 
of October when its only oil refinery unexpectedly remained shut 
down for repairs.  This was not the first time that Indeni Oil 
Refinery, a joint venture between the GRZ and the French-owned oil 
giant Total, experienced closures due to obsolete infrastructure and 
lax maintenance.  Finance Minister Ng'andu Magande commented that 
the fuel shortage was "compounded by the refusal by an American bank 
to finance the GRZ's purchase of 60,000 tons of crude oil, because 
it came from Iran."  According to press reports, President Mwanawasa 
intervened, securing funds from the Zambia-based Finance Bank.  By 
month's end, the shortages have been resolved. 
 
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Diamond prospecting venture does not pan out 
-------------------------------------------- 
 
¶4. Spirit of the River, a Canadian firm that had announced in 
January 2007 that it had discovered diamonds in Zambia's Western 
Province and would invest USD 3.5 million to develop diamond mining, 
allegedly has closed its offices after failing to settle debts with 
banks, local businesses, and residents.  According to media reports, 
court bailiffs have seized the company's office equipment in the 
provincial capital, Mongu, and Spirit of the River has terminated 
its mining activities. 
 
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Trading Licensing Act amended 
----------------------------- 
 
¶5. The GRZ has amended the Trade and Licensing Act, following 
Parliament's recommendation to repeal the law.  Trade Minister Felix 
Mutati said that the new Act will clarify the types of business that 
can be conducted by Zambians and foreigners and also prescribe the 
fees for each business entity.  Comment:  In recent years, GRZ 
officials often stated--without legal foundation--that only Zambians 
could participate in the retail sector.  The amendment may impact 
Chinese nationals who run many of the small retail outlets in 
Kamwala, a lower-end commercial area in Lusaka.  End comment. 
 
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The Zambia Development Act undergoes revision 
--------------------------------------------- 
 
¶6. The GRZ will revise the Zambia Development Agency Act of 2006, in 
response to stakeholder concerns on such issues as the minimum 
investment amounts to qualify for investment licenses, incentives, 
and work permits.   Comment: The revision of the ZDA Act should 
facilitate more small-scale investment, and help larger investors 
with skilled employment issues.  The Act has been deemed vague and 
open to misinterpretation by government agencies, mostly notably the 
Immigration Department.  The issuance of work permits has been 
cumbersome and a disincentive to serious investors.  The revision 
will most likely be done in the first quarter of 2008.  End comment. 
 
 
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Northern provincial airport construction on cards 
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LUSAKA 00001246  002 OF 002 
 
 
¶7. The GRZ has allocated K1.1 billion (approximately USD 250 
million) for the construction of a modern terminal at Kasama Airport 
in Zambia's Northern Province.  Built during the Second World War, 
Kasama Airport is in disrepair and is unsuitable for commercial 
flights.  The construction of the Kasama terminal is part of the 
GRZ's "Visit Zambia Tourism Campaign." 
 
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GRZ submits draft Tender Bill 
----------------------------- 
 
¶8. The Zambia National Tender Board (ZNTB), a statutory body that 
regulates and controls public procurement, submitted a draft bill to 
Cabinet that will enhance its independence.  The bill proposes that 
authority to appoint the organization's board members and Director 
General be removed from the President.  ZNTB has also made 
recommendations on the composition of the Central Tender Committee, 
which requests tenders and awards contracts.  The proposal--if 
accepted--could mean greater inclusion of the private sector and 
non-governmental institutions in tender decision-making. 
 
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New rural financing programs launched 
------------------------------------- 
 
¶9. The GRZ launched a K542.2 billion (approximately USD 134 million) 
five-year revolving Irrigation Development Fund.  The Fund will help 
local farmers increase their productivity using improved irrigation 
technologies and services.  In a separate development, the 
International Fund for Agricultural Development (IFAD) launched the 
Rural Finance Program, a USD 13.8 million concessionary loan 
facility for entrepreneurs in rural areas where access to financial 
services is almost non-existent.  Comment: Financing for irrigation 
is a big improvement on the standard GRZ support for agriculture, 
which has traditionally involved provision of seeds and fertilizer. 
Also, financing for rural entrepreneurs will fill a critical market 
gap. End comment. 
 
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Zambia to participate in the Katanga Mining Expo 
--------------------------------------------- --- 
 
¶10. The Zambia Development Agency, in conjunction with the USAID 
funded Market Access Trade and Enabling Policies (MATEP) program and 
the Mining Suppliers and Contractors Association, is organizing a 
trade mission to the Katanga Mining Expo, Congo DR, from November 
26-28, 2007.  The expo will offer opportunities to showcase Zambian 
mining and processing equipment, protective clothing, food products, 
and building materials.  Over 50 Zambian companies have registered 
to participate in this mission.  Comment: The mining sector in 
Katanga province poses a great opportunity for Zambian companies who 
are working with U.S.-based and foreign suppliers to grow in this 
market.  Congo DR also offers Zambian suppliers a huge market for 
consumer goods.  End comment. 
 
MARTINEZ