Investment plan

U.S. investment plan for Zambia targets food security in Africa

Zambia’s post-pandemic campaign to diversify away from mineral exports received a big boost when USAID announced an investment package worth over $44 million.

Aiming to “boost private investment on a scale that could never be matched by foreign aid alone,” TradeBoost Zambia will build on USAID’s new flagship Africa Trade and Investment Program at the continental scale.

Diversification will bring benefits in terms of economic growth and food security

Just three sectors – retail, mining and construction – made up nearly half of Zambia’s GDP before the pandemic. USAID’s focus on agricultural development will be welcomed in a country where population growth is outstripping national agricultural production, which accounts for only 5.8 percent of GDP despite employing 70 percent of Zambians.

In the short term, it is hoped that an $8.5 million export deal with agricultural companies Zdenakie and NewGrowCo will also help relieve pressure on East African grain importers who are bearing the brunt of the the war in Ukraine. USAID Administrator Samantha Power has announced plans to export 1,300 metric tons of grain to struggling neighbors “within days”, while a revolving credit facility for Zambian grain traders will support exporting an additional 30,000 metric tons across Africa in the future.

Unlike food insecurity in neighboring countries, Zambia’s position is relatively advantageous. A record maize harvest in 2021-22 has seen prices remain relatively stable, allowing Zambian producers to focus on regional exports. Neighboring Zimbabwe, which imported $13m worth of maize from Zambia in 2020, may be looking to its northern border as it seeks to replace the $11.7m worth of wheat imports from Ukraine that arrived last year. previous years.

High-value crops promise greater export sustainability

Sustaining export growth in Zambia’s agricultural sector can be challenging. A survey by the Zambia Institute of Policy Analysis and Research reveals that on average, new agricultural export deals in Zambia only survive 1-2 years: only 39% survive beyond their first year and less than 10% pass the 6-year mark. .

Coupled with greater consistency in business models with US buyers, investing in high-value crops promises more stable long-term returns. Corn, sugar, tobacco and cotton have traditionally enjoyed higher export sustainability rates than other commodities, with 45% of deals reaching a second year.

In this light, foreign investment in the cultivation of high-value macadamia nuts bodes well for the sustainability of Zambia’s agricultural export growth. A $200,000 USAID grant unlocked a $4.5 million investment from South African firm Foxfin Financial Services, which has since purchased a 165ha farm that will create nearly 100 jobs – the majority being owned by women – in the production of macadamia.

Empowering Women Farmers

Women workers and entrepreneurs stand to gain from USAID plans: the accompanying Business Enabling Project (BEP), which will generate $14 million in incentives for private sector investment in rural SMEs in five years, “seeks to unleash the power of Zambia’s greatest untapped resource”. ”.

The BEP will “work with women farmers…to improve financial record keeping, access finance and grow their businesses,” says Power, who hopes this will enable “subsistence farmers in Zambia to increase production and transition to agriculture.” ‘commercial farming’.