Zambia offers a strong policy environment for investors with no exchange control, no capital gains tax and a fairly good legal system protecting property rights, according to Stuart Theobald, Chairman of Intellidex and Imara Contributing Analyst.

Theobald said whereas there is an investment guarantee regime backed by the World Bank and Zambia is a member of the International Convention on the Settlement of Investment Disputes, the problem is identifying the right opportunities.

“For portfolio investors, Zambia’s Eurobonds have captured the attention of some large international investors recently, though kwacha-denominated government instruments have been avoided since last year’s currency collapse,” he said.

“The Lusaka Stock Exchange is quite sophisticated and well-regulated but has almost no liquidity. Much of it is accounted for by subsidiaries of foreign parents like Shoprite and Standard Chartered. Major local companies like agricultural giant Zambeef and government controlled ZCCM Holdings can be traded via secondary listings in London,” he added.

However, according to Theobald, most interesting to investors are direct investment opportunities, from the mines to tertiary sectors.

“New mining investments have various government incentives on offer. The power sector is likely to offer many new opportunities for independent power producers. Agriculture and agri-processing has the potential to thrive if the right policy moves are made. Tourism and manufacturing all have great potential,” he said.

“South African retailers have moved into the market in a big way, with Woolworths, Pick n Pay, Truworths, Foschini, Massmart, Famous Brands, Edcon, Mr Price and Shoprite all heavily invested. The financial sector is dominated by foreign banks while South African insurers like Hollard and Liberty, and the UK’s Prudential PLC have been moving into the market through acquisition and organic growth. Business services from accounting to IT have also seen extensive South African investment,” he said.

Zambia is a core market for Imara Group, according to Imara’s Executive Director Harry Wulfsohn.

“We have a 15% allocation to Zambia in our Pan Africa listed equity fund, the Imara African Opportunities Fund. We also own a local Zambian pension fund asset manager called Imara ECR and have a minority shareholding in Stockbrokers Zambia,” he said.

In addition, the asset manager has just completed a private equity transaction in Zambia backing a local industrial start up business.

Moreover, Imara’s corporate finance team in conjunction with Stockbrokers Zambia have completed a number of mandates this year.

General elections will be held in Zambia on Thursday, August 11, 2016 to elect the President and National Assembly.

“In our listed equity funds, we build the portfolios on a bottom up basis typically with low portfolio turnover. The outcome of the election is therefore unlikely to result in any immediate portfolio changes,” Wulfsohn told Africa Global Funds.

“We will be talking to the Management teams of the companies in our portfolios to see if there will be any material impact to their business outlook which could result in adjustments to our weightings,” he said.

“In our view whoever wins the election will need to implement an IMF austerity program,” Wulfsohn added.

Theobald said that outlook will be clearer after August 11, but any scenario is positive: “Zambia will continue to be a standout opportunity in Africa.”