The Centre for Trade Policy and Development has questioned the methodology used to come up with the downgrading of Zambia to the world’s bottom 10 countries of attracting investment.
Zambia is one of the ten least attractive jurisdictions in the world for mining investment, according to the Annual Survey of Mining Companies recently released by the Fraser Institute, an independent think-tank, and the global benchmark for investors’ perceptions.
The annual survey is said to be closely watched by companies, minerals councils and mining chambers, as well as minerals and mining ministries, which typically use the results as a measure of their efficacy in attracting investment.
Zambia has been evaluated in the survey for several consecutive years, but this was the first time that it was ranked in the bottom ten of the participating jurisdictions.
In an interview, CTPD mineral researcher Webby Banda, however, said Zambia needed to maintain fiscal stability in the mining sector.
“If you are inconsistent with the mining fiscal policy, you are bound to increase the investor perception of risk and once you improve that, it will translate into an increased cost of capital but what we are trying to say is that we need to query the methodology that was employed by the Fraser institute because this is basically questionnaire survey and the sampling technique might be bad and responses also might not be valid,” Banda said.” But also as a country, I think we need to straighten up in terms of maintaining stability in fiscal policy, we have not been consistent. We don’t know exactly how that has translated into a higher investor perception of risk but we don’t exactly know how it has influenced the investor perception of risk because if you are looking at the factors that attract mining investment, fiscal policy ranks fairly lower than geological potential. We need to straighten up, but geological potential and the need to incentivize explorations, it’s important.
He said Zambia’s potential to attract investment lay in the abundance of its natural resources.
“We have seen that report by the Frazer institute survey which has downgraded Zambia to the world’s bottom 10 countries of attracting investment but you must look into the modality of how that index was arrived at, that index was arrived at based on issuing questionnaires and people were responding and if something in the survey is not adequate, it’s possible to actually demerit those results,” said Banda. “So it’s an issue of methodology really, how we use something. I mean, were these people biased in giving those responses? Then secondly, I have always said this that what attracts investment in Zambia is mainly investment potential or the mineral potential that the country and its people have.”