Paul Richards, Head – Corporate and Investment Banking, Stanbic Bank Zambia Limited talks about doing business in Zambia

stanbic_bank-blogStanbic has been present in Zambia since 1992 with Standard Bank’s acquisition of ANZ Grindlays as a part of its African business development strategy. Can you tell us about Stanbic’s evolution in Zambia?

PR: Stanbic has branches in 13 cities and towns in Zambia and will be opening three more branches this year as our expansion in Zambia continues. Stanbic, a part of the JSE listed holdings company, Standard Bank Investment Corporation, was the first South African bank to identify with the potential of embarking into the rest of Africa. This bold move continues to stand us in good stead making the Stanbic franchise in Africa is a very powerful one with a significant first-mover advantage. Stanbic is well positioned in the local market, offering a full retail banking bouquet, business banking services and corporate and investment banking solutions.

Can you tell us about the importance of the mining sector to the Zambian economy and your thoughts on diversifying the Zambian economy away from copper mining?

PR: Mining is and will remain a key driver of the Zambian economy. However, government policy and private sector sentiments to diversify the economy away from over- reliance on copper is sensible as it will better insulate the economy against shocks in the copper price. The drop in the copper price in 2003 served as a warning that too much focus was being placed on copper. Copper will always be important but it need not contribute upwards of 80% of the economy. Zambia needs to continue investing in other sectors, such as agricultural and hydro-energy holds enormous potential, as Zambia possesses 28% of all water resorces in the SADC region of which only 8% is being fully harnessed.

What differentiates Zambia from its neighbors as an investment destination?

PR: Zambia is becoming increasingly business-friendly being ranked number 52 out of 183 countries by the World Bank in terms of the ease of doing business. Zambia now has to compete with the likes of Angola and Mozambique for foreign direct investment and that drives policy. Zambia has had an excellent form of democracy in place since it was granted independence in 1964. There has been a recent peaceful and harmonized transition of government in a region with a history of political instability; Zambia stands out a model of political stability. Zambia is rich in natural resources from minerals to water and coming from a low base also gives investors early rewards. The Capital markets and financial sector are continually maturing. In the last three to four years, banks have put together some exotic instruments making ten to 15 year funding available where you were previously lucky to get five years’ funding.

There is also a substantial amount of investment coming from East Africa from Kenya and Tanzania. Even its African neighbors see Zambia as an attractive investment destination. Intra-African trade is increasing exponentially and is a positive indicator for the continent’s development and an important growth mechanism.

Promoting transparency in the financial industry is high on the policy agenda and eveident in the introduction of SI 32, which is set for July 2013. How will this affect the ease of doing business in Zambia?

PR: The thrust of SI 32 is honorable and aimed at ensuring that the pool of income of the country as a whole is increased. That will be accompanied by investment in infrastructure, healthcare and education. It does however present challenges as it holds the risk of adding cost to business, particularly in the requirements of establishing Letters of Credit. Our clients see the letter of credit as grudge purchase and banks are in the middle trying to find the most optimal and cost effective solutions for our clients.

What does the medium term hold for the Zambian economy and what will Stanbic’s role be in the country?

PR: The Zambian economy is expected to grow by close to 7% this year proving that the country is not at all in austerity. Cash and credit is the fuel of the engine of growth and when banks turn off those taps and rely solely on shareholder and equity investments then it slows down the whole economic engine. This is not the case in Zambia where we do not see any drop in the amount of investment and lending. On Friday, May 31, the Bank of Zambia increased the policy rate by 25 basis points (to 9.5%). It is a manageable increase and the decision was made at the right time and will be absorbed. Mining in the traditional ‘Copperbelt’ has been there since the 1950’s. Now there is the emergence of a new Copperbelt that heads west from Solwezi with extensive deposits and significant investment where companies will be able to produce 300,000 tonnes a year in the next three years from a standing start. The amount of capital expenditure by the big companies shows their commitment to the industry and the region for at least the next 20 years. Mining in Zambia will remain an important contributor if not the premier contributor to GDP in the future. Stanbic is an African Bank with African roots. Our competitors call it “Africa”; we call it “Home”. That simple strap line underscores our unequivocal commitment to the African continent.

This interview was conducted as part of GBR’s research on the Copperbelt Mining Region of Africa, to be published in Engineering and Mining Journal. To participate in this report, please contact Jolanta Ksiezniak at

To view related articles, please see: Mining Finance Africa: Great Challenges and Great Expectations / Africa Mining Indaba & Mozambique: Africa’s Next Mining Hub? / African Exploration: Accessing Finance in Challenging Markets

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