China was the highest contributor to employment among all the Majority Owned Foreign Affiliates in Zambia (MOFAs) by the end of 2017, Bank of Zambia (BoZ) data shows.
And the central bank has stressed that Chinese contribution to the Zambian economy through employment, value addition, taxes, and salaries is significant.
In an updated BoZ submission to the Committee on National Economy, Trade and Labour Matters on China-Zambia Relations vis-à-vis trade and investment, data showed that China was the highest single contributor to job creation among all the MOFAs as at December 31, 2017, beating four other industrialised economies.
MOFAs are enterprises with 50 per cent and above of share capital attributable to foreign investors.
“Several advantages accrue to the Zambian economy as a result of significant FDI flows from China. Relative to other major source countries, Chinese companies contribute significantly to the Zambian economy in terms of employment, value addition, taxes and salaries. The assessment below is based on a survey of 193 MOFAs,” BoZ stated.
“In 2017, China was the highest contributor to employment among all the MOFAs surveyed. MOFAs from China contributed 21.7 per cent (18,525) of the total number of employees by MOFAs.”
According to the BoZ’s survey, the Chinese MOFAs beat four other industrialised economies such as Britain, whose MOFAs only contributed 18 per cent of the total employment; Canada at 13.6 per cent; Switzerland at 8.4 per cent and South Africa, whose contribution amounted to only 8.2 per cent of the total employment.
In terms of taxes on income, MOFAs from China were however, fourth, contributing just 8.5 per cent (US $57.4 million) of the total taxes remitted by the surveyed MOFAs in 2017 (US $675.5 million).
And in terms of contribution to salaries drawn by workers who worked for Chinese companies in 2017, the overall contribution accounted for only 6.6 per cent of the total salaries, rendering China in fifth position behind Canada, Switzerland, Britain and South Africa.
“Chinese MOFAs were among the top-five contributors to salaries drawn by workers who worked for these companies in 2017. Companies from China accounted for 6.6 per cent (US $72.2 million) of total salaries drawn by workers in MOFAs (US $1,089.7),” it stated.
But the central bank concluded that Chinese FDI investments remained significant in Zambia.
“All in all, FDI investments from China have contributed to the Zambian economy through employment, value addition, taxes, and salaries. Relative to other major source countries of FDI inflows into Zambia, China’s contribution is significant. This contribution can be said to be the practical advantages of Chinese investments in Zambia. To maximize these benefits, it is important that the country institutes measures to attract more FDI into the country, whether from China or elsewhere. And monitor closely so that real benefits can accrue to the citizens,” stated BoZ.
The working paper was an addendum that augmented a submission made by the BoZ on December 21, 2018, in response to the request by the Parliamentary Committee on National Economy, Trade and Labour Matters.
The Committee asked BoZ to address a range of issues including: the adequacy of the policy and legal framework governing FDI in Zambia; the advantages of China’s foreign trade and investment in Zambia and China’s investment contribution to the major sectors of the national economy, among several other pertinent questions.