SO Zambia is this July set to begin the manufacturing of car batteries locally!
This is at the Zambia JianXi Multi-Facility Economic Zone (MFEZ) in Chibombo district, in Central Province.
According to Airumi New Energy, the equipment for the manufacturing of the car batteries have already reached the MFEZ located on the Lusaka-Kabwe highway.
This looks like a small step which may not have any significance or bearing on the national economy and yet it has telling ramifications on such basic fundamentals like the foreign exchange (FOREX) market.
To appreciate such seemingly small projects, one has to look at how much forex is currently being spent to import small products like car batteries.
At any standard, this is a major project, the investors having spent $60 million in the first phase of the project for research and development and $30 million in the second phase for implementation.
In the first phase the car batteries manufacturing plant will be able to produce about 400, 000 batteries and once the plant is at full capacity it will double that to 800, 000 batteries.
This production level is an annual one.
Not to mention the benefits to the local entities through the forward and backwards linkages that will be created, the project will curb the forex drain through the importation of the batteries.
This will, to some extent and in the long run, help to improve the value of the local currency, the Kwacha, against the values of major convertible currencies like the United States (US) dollar.
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At another level, when the investors of the project start exporting the batteries to the neighouring region and beyond, especially given the level of production, it will earn forex.
Imagine investors in other sectors coming up with similar projects which will lead to the production of such other import substitutes and increase export of the locally-produced items.
This is how the private sectors, using local investments, can contribute to the reduction in the forex drain while also attracting the forex into the markets for the host countries for their investments.
The benefits of such projects go beyond the creation of job opportunities for the local people as well as business prospects for the domestic economic players.
On its part, the Government should continue creating a suitable economic environment by coming up with appropriate policies to continue attracting local and foreign direct investments.
Any dollar retained in the country because of the production of import substitutes is good enough and worth the efforts in the improvement of the value of the Kwacha.
Kudos to the developers of the Chibombo MFEZ for this traction!
