Impact Investing in Zambia – My observations from the ICA 2019


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The Impact Capital Africa Conference, ICA 2019, that took place in mid-October in Lusaka was a success. Local and international investors gathered, together with investors, development agencies and other stakeholders to see the pitches of over 25 local SMEs. We saw fantastic companies presenting their stories. A wide spectrum of companies ranging from recyclers, app producers, agri out-grower schemes, manufacturers, fintechs, food processing companies and many more. Not surprisingly the presenters painted a beautiful picture; they told us that the prospects look good, the opportunities are vast and it is the right time to invest in their companies.


Is the outlook that positive? Are there so many fantastic opportunities around and are the number of people present an indication of the activity in the impact investment sector in Zambia?


Without scratching the surface, one would conclude that this is far away from reality. The facts are clear for all to see. The macro economic situation is in a quagmire. Emerging markets are not popular with investors in a period of declining global growth. In Zambia the interest rates are creeping back up with the increased indebtedness of the country. The reduced foreign currency reserves lead to a liquidity crunch, which has a knock-on effect in the finance sector and beyond. Inflation is rising and the Zambian Kwacha is under constant devaluation pressure. In addition, power is out for half the day, reducing many productive hours of SMEs and the service industry while the price of fuel to run the back-up generators is expensive. In such an economic climate surviving becomes the number one priority. The Zambian economy is small with 17 million people sharing a GDP of USD 25billion. But this is most likely tilted to the upside by the mining sector claiming over 12% of that GDP according to the World Bank. Then we have an uneven GINI coefficient that is also very high, which points to a small base of spenders in the country. No wonder that Zambia slipped in the global competitive index to 120 out of 141 countries.

Panel discussing weathering challenges and identifying opportunities in the local context

Is the enthusiasm of the presenters at the ICA unfounded or are there other angles we need to consider? Being an impact investor in Zambia, I was very pleased about the positive mood. The companies, many of whom I know personally for a long time, were telling their real story. There are many jewels in the impact space. The reasons are varied and some should be highlighted. I meet entrepreneurs who are smart, resourceful and committed to the task at hand. The shift in the entrepreneurs’ mindset is vital. I see two movements that are important. One is the openness to accepting third party injection of capital from involved equity partners in the business. The other is the receptiveness for third party support and the awareness that there are areas of improvement where external help is needed. This is not to quash the qualities of previous generation of business builders, but many were - and still are - very reluctant to opening-up to outside partners. Equity was frowned upon as it comes with investors poking their nose into the family business and trying to bring about change.The attitude towards investors is changing. It’s true that, one of the main issues is funding, but in addition there are also pertinent questions that are asked, like how can you, Ms. Investor, help me with accounting issues, tech problems, linkage to markets overseas or in strategic positioning of the company for the upcoming growth phase? Even though some are reluctant to give away equity at low valuations, they realise that without this, the growth will never happen and if, then it does at a much slower pace.



Listening to the company pitches, it was impressive to see innovative products, processes and solutions on offer. I would call it innovation to solve local issues. This can be in terms of how; to achieve scalability, target the underserved community, work around the last mile issues or integrate environmental topics into a business case. Many of the companies are either working with or directly targeting small-scale farmers, including them into the financial markets, improving their logistics and knowledge of the markets. These are exactly the solutions we need. As I tend to say, we don’t create an impact in building one more petrol station or another shopping mall. Many of the young companies leverage technology to gather data that can be used to optimise their growth and to better understand their markets and clients. This again is a new approach. It’s a change from the consumer-based trading economy to a more solution-driven manufacturing and service economy, it is especially a change in using data as a base to make decisions and drive the businesses forward.


We all agree that the investment climate in Zambia is challenging but the ICA 2019 inspired many participants, including myself. The biggest take-away came from the upcoming generation of entrepreneurs, who drive investment differently by using innovative methods to create profitable and sustainable companies that are at the same time socially and environmentally impactful. I don’t think they are overselling themselves. There are rough diamonds among them that will become successful since they have leaders with the right attitude and ethics to make it happen.


Closing remarks from Emma Parker, CEO Impact Capital Africa