Zambia’s copper can drive global shift to electric cars, Zanaco executive says

By David Whitehouse
Posted on Thursday, 3 March 2022 14:52

Tesla's electric car factory in Gruenheide
The charging plug of a Tesla electric car is pictured on a charging station at the market place in Gruenheide, near Berlin, Germany, December 28, 2021. REUTERS/Annegret Hilse

Zambia needs to scale up copper-wire production as global adoption of electric cars accelerates, Mutisunge Zulu, chief risk officer at Zambia National Commercial Bank (Zanaco), tells The Africa Report.

Copper wire exports would bring in four times more revenue than exporting raw copper, Zulu says in Lusaka. “There is an opportunity which hasn’t been tapped.”

The global shift to electric vehicles (EVs) is opening up new possibilities for Africa’s second-largest copper producer. A pure electric vehicle can contain more than a mile of copper wires. Electric-car charging points also have heavy copper-wire requirements, with solar panels, wind turbines and smart power grids also needing copper wiring and cabling.

Zambia, meanwhile, has been sending ambiguous signals on implementing the African Continental Free Trade Agreement (AfCFTA). The country has signed and ratified the agreement, but in February, minister of commerce Chipoka Mulenga said the country needs more time before committing to it. The accord as it stands favours countries which already have well-established value-adding activities, Mulenga said.

  • Trade has “has historically been hampered by weak manufacturing capability and “overdependence on very few traditional products such as copper and maize,” Zulu says. “Zambia continues to export raw copper, depriving itself of real value.”
  • Zulu points to Neelkanth Cables and Zambia Metal Fabricators as examples of  companies which are leading the way in copper-wire manufacturing. But production remains too small-scale, he says.

Chicken and egg

Membership of regional trade groupings such as the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA) has not yielded the desired trade synergies for Zambia, “so it would not be surprising” for the authorities to ask for more time on AfCFTA, Zulu says.

“Which comes first, production from improved manufacturing capability for trade, or trade agreements which then improve manufacturing potential? Zambia seems to fall in the latter group.” It is likely that Zambia will commit to the partnership, but only after it addresses ways in which it can fully benefit, Zulu says.

Zulu sees a range of opportunities for diversification.

  • Agricultural production needs to be less concentrated on corn and maize. Increased cassava production can supply ethanol for hand sanitisers, in increased demand due to Covid.
  • More packaging of agricultural products in cans and bottles will also enable Zambia to add more value,  Zulu says. “That’s the easiest way to lift manufacturing capacity.”
  • Given its favourable precipitation, Zambia is also in a strong position to export hydro power to the rest of Africa, he adds.

Zulu is positive that the right policy steps are being taken. He points to the creation of manufacturing zones offering five-year tax exemptions. The country has invested in infrastructure such as roads and the Kazungula bridge to improve the flow of trade in the southern African corridor. The fact that there is now a ministry for small and medium-sized businesses is also a positive sign, Zulu says. “Previously there was an implementation problem.”

  • Still, he says, the cost of finance in Zambia remains very high and it remains very hard to get funding at the business concept stage. That, he says, is a reflection of “fiscal posture.”
  • Only by addressing fiscal issues will Zambia be able get interest rates down, he adds.

Bottom line

Zambia will miss a major opportunity if it doesn’t scale up its copper wire manufacturing capability.

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