The Proposal

Zambia is a rapidly growing economy with a population 20 million people. Renowned for its friendly populace and peaceful political transitions since gaining independence in 1964, it is rich in natural resources, including vast arable land, renewable energy potential, diverse wildlife, and the iconic Victoria Falls.

Zambia's economic landscape has shown resilience and growth, marked by a rebound in GDP growth to 4.6% in 2021 and 3.4% in 2022 following a downturn in 2020. With US$ 1,457 GDP per capital, the country boasts of 15% per capital growth. The stable political environment, strong leadership and attractive investment incentives position Zambia as a lucrative destination for investments aimed at economic diversification. Zambia has 100% repatriation of profits policy, a huge incentive for foreign investments.

Zambia's agricultural sector supports the livelihoods of more than half of the population. To accelerate growth and development of the sector, the Government has developed various policies and programs aimed at enhancing production and productivity, improving market access, promoting private-sector involvement, and strengthening the resilience of smallholder farmers. Among these policy strategies is the Comprehensive Agricultural Transformation Support Program (CATSP).

Over the next five years, Government will prioritise the following:

• Promote crop, livestock and fisheries diversification in line with the diversification agricultural policy
• Boost nature positive food production and sustainable livelihood alternatives based on regional potentials, e.g. wetland rice, aquaculture, poultry, honey production, etc
• Invest in seed breeding, nutritional diversity and post-harvest loss reduction strategies
• Promote agricultural mechanization and irrigation in line with the Zambia Mechanization Strategy launched in February 2024

Zambia Typologies

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Government of Zambia: Investment cases in Zambia

Zambia Investment Cases and Interventions

Zambia is the second-largest soybean producer in the southern Africa, after South Africa. However, Zambia imports significant quantities of soybean products, particularly crude soybean oil, signaling a high domestic demand for soybeans.

The investment under HIHI aims to produce 227,799MT by 2030 through targeted investments in improved production practices, processing, and value addition, improved post-harvest management, and certified seed multiplication.

Investments in improved production throughout grower schemes area will address the challenge of limited access to inputs such as seeds and fertilizer, and agricultural services has resulted in a low productivity level of 0.9MT/Ha. The aim is to improve production through outgrower schemes by providing integrated packages of inputs, including seed, fertilizer, and inoculum, along with essential services like mechanization and agricultural insurance. This investment is targeted to support 138,060 hectares, supplemented by comprehensive training and financing to facilitate adoption. However, initial resistance to change and limited access to financing may hinder progress. Comprehensive training programs will be instituted to mitigate these challenges, supported by grant financing from development partners.

Investments in processing and value addition will address the challenge of high prices of soybeans products, including oil, cakes, and soymeal thereby limiting consumers accessibility because of the significant distances between production areas and existing processing units. The proposed investments will focus on processing and value addition by establishing six Small and Medium Enterprises (SMEs) processing facilities closer to production communities, each with a capacity of 2 MT per hour, while developing off taker contracts and linkages with larger producers. Contractual agreements will be established with suppliers while maintaining connections with existing producers to provide mentorship and potentially enhance access to financial resources.

Investments in post-harvest management will address the challenges of high reliance on manual threshing methods resulting in an estimated 5% loss of produce due to shattering and lodging. Investment will set up 50 SMEs to offer threshing services with locally manufactured threshers. In addition, partnerships with producers will be established to ensure sufficient utilization of these services. A significant risk is the fluctuating demand for threshing services, which may affect the sustainability of the enterprises. To mitigate this risk, the service offerings can be extended to include other crops such as millet, rice, sorghum, cowpea, and common beans and creating partnerships with producers.

Investments in high quality seed multiplication will address the challenge of excessive seed recycling and low use of certified seeds due to high prices. The investments will target 108 smallholder farmer associations, equipping them with the necessary inputs and training to cultivate certified seeds. However, there is a risk of compromised seed quality arising from insufficient quality control measures. To address this concern, intensified training programs and stringent quality control measures will be implemented to ensure the production of high-quality seeds.

The total proposed investment is USD 47.9 million that would yield a high internal rate of 17 to 38 percent across the three investment areas. The net present value is estimated to be USD 15.2 million, and the total direct and indirect beneficiaries are estimated to be 61,580 and 370,000 respectively. The average expected income increase through these investments would be approximately USD 258.5 for each beneficiary

Maize is a critical food crop in Zambia, contributing significantly to the country's food security and that of other countries in the region. It is essential for human and animal consumption and plays a vital role in agro-industry. Beyond its role in food security, maize also serves as a source of income through domestic and regional trade

The investment under Hand in Hand Initiative aims to increase maize production by 2.5 million MT per year by 2030 from the current 3 million MT per year through targeted investments in mechanization, irrigation, and post-harvest management.

Investments in mechanization will enhance maize production efficiency and productivity by establishing 838 one-stop mechanization hubs. These hubs will provide mechanization services through a rental model. The services offered at the hubs will be diversified to cover different crops throughout the year, ensuring that the equipment is utilized outside the traditional maize-growing season. Additionally, the rental model between farmers and machinery owners will spread the financial burden and make access to machinery more affordable for smallholders.

Investments in irrigation will focus on expanding irrigation infrastructure to increase agricultural output, with plans to provide 50,000 farmers with irrigation kits comprising Boreholes, 1HP Solar pumps, and drip irrigation kits (1 Ha each) through discounted loan programs. This investment opportunity aims to enhance water accessibility and enable year-round cultivation. To address the challenge of water availability, a focus will be placed on water-recharging mechanisms to ensure sustainable use of water resources.

Investments in seed breeding, nutritional diversity and post-harvest loss reduction post-harvest management will focus on constructing 200 warehouses, each with a capacity of 5000MT, to facilitate aggregation and marketing. These warehouses will be available to grain traders through rental arrangements, improving access to better storage and reducing losses. A significant risk is the inadequate road and logistical network to access the storage facilities, which could hinder transportation of grain to these warehouses. Collaboration with local authorities and relevant stakeholders will be pursued to improve road infrastructure and accessibility to warehouse sites, ensuring that traders can transport their produce efficiently for storage and subsequent marketing.

The total proposed investment is USD 760 million that would yield a high internal rate of 27-34 percent across the three investment areas. The net present value is estimated to be USD 343 million, and the total direct and indirect beneficiaries are estimated to be 152,000 and 912,000 respectively. The average expected income increase through these investments would be approximately USD 1,376 for each beneficiary.

Aquaculture 96.7 Million USD 104,250 Beneficiaries

The aquaculture sector is a strategic sector identified by Government as a key driver of the country’s economic transformation and job creation. This is within the context of Zambia’s Vision 2030 which places emphasis on commercialized fish production through value addition.1 The accelerated fish production is anchored in development policies that are consistent with sustainable environment and natural resource management principles

Under the HIHI, investing in aquaculture aims to increase fish production from the current 76,627 MT (2023) to 130,000 MT in 2035, involving 86,875 direct beneficiaries. The achievement of these outcomes will require investments in the following key outputs:

• Improve Input Support through construction of 4 hatcheries, 4 nurseries; 4 feed production plants, and 4 factories for producing cages and other aquaculture accessories.
• Out-grower Schemes through investments in five cages (6m*6m*6m) per fish farmer for 1,675 farmers and construction of 6,685 climate-smart fishponds in Northern, Northwestern and Western Provinces.
• Post-harvest Management which will focus on the construction of 7 cold rooms and 24 processing facilities to facilitate annual exports of 60 MT. Out-grower farmers will access these services at a cost.

The total proposed investment is USD 60 million that would yield high internal rates of 17.7 to 28.2 percent across the three investment areas. The net present value is estimated to be USD 14 million, and the total direct and indirect beneficiaries are estimated to be 17,375 and 86,875 respectively. The average expected income increase through these investments would be approximately USD 780 for each beneficiary.

Honey 48.2 Million USD 700,000 Beneficiaries

Zambia's honey sector is a key player in the country's push for rural development and environmental conservation. The sector’s potential remains untapped, with current production levels estimated at 14,239 metric tonnes (MT) annually, based on the 2022 Livestock Survey (Ministry of Fisheries and Livestock & Ministry of Finance and National Planning, 2022, p. 93).

HIHI aims to increase Zambia’s honey output by an additional 20,000 MT/year by 2030, contributing significantly to the country’s national target of 96,000 MT/year. HIHI also plans to improve hive productivity from the current 7.5 kg/hive to between 15-30 kg/hive, depending on the region. HIHI's strategy will focus on three main investment areas that address key challenges in Zambia’s honey value chain.

Investments in forest concessions will involve public-private partnerships to sustainably manage forest resources and increase hive productivity. In forest concessional Beekeeping, an investment of $22 million will be required towards establishing public-private partnerships and improving access to forest resources. This investment will also support pilot projects aimed at increasing hive productivity to 30 kg/hive.

The second area of investment is Queen Rearing, which is aimed at sustaining long-term demand for queen bees. The proposed investment will involve establishing specialized centres in four provinces to enhance bee colony health and improve the productivity of honey-producing hives. An investment of $3 million is required to develop specialized queen bee breeding centres. Long-term contracts with buyers and risk-sharing agreements will be introduced to stabilize demand and ensure the sustainability of queen rearing operations.

The Out-grower scheme face infrastructural challenges, particularly the lack of bulking centres and poor road networks in rural areas. The out-grower scheme, which will connect small-scale beekeepers to larger processors, thereby improving collection, bulking, and processing infrastructure. The investment in out-grower scheme will help streamline the value chain and ensure that beekeepers have access to markets, quality control, and necessary processing facilities. The Out-grower scheme will require an investment of $23.2 million to improve bulking and processing infrastructure, particularly in six provinces. Anchor processors will manage the collection and processing of honey, ensuring that beekeepers have reliable market access and that the quality of the honey produced meets international standards.

The total proposed investment is USD 48.2 million that would yield a high internal rate of 18 to 18.5 percent across the four investment areas. The net present value is estimated to be USD 3.5 million, and the total direct and indirect beneficiaries are estimated to be 100,000 and 600,000 respectively. The average expected income increase through these investments would be approximately USD 400 for each beneficiary.

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