In­dus­try Risk/Re­ward In­dex - Zam­bia Tourism Risk/Re­ward In­dex

Zambian Business Times - - BUSINESS REVIEW - Source: BMI Fitch Re­search

Key View: Zam­bia's score of 43.91 out of 100 in our Tourism Risk/Re­ward In­dex sees the coun­try place eighth out of 20 coun­tries in Sub-Sa­ha­ran Africa. Zam­bia's score is strength­ened by its In­dus­try Risks score, one of the best in the re­gion, show­ing the sup­port­ive en­vi­ron­ment for tourism com­pa­nies.

Strong Risks And Steady Re­wards

Zam­bia vs Sub-Sa­ha­ran Africa Av­er­age, Tourism Risk/Re­ward In­dex (Q418)


This sec­tion of­fers an eval­u­a­tion of the tourism sec­tor's size and growth po­ten­tial in each state, along with broader in­dus­try/state char­ac­ter­is­tics that may in­hibit its de­vel­op­ment. The re­wards score for tourism takes into ac­count the num­bers and percentage growth of tourist ar­rivals over the past year and our fore­casts for fu­ture growth over the forecast pe­riod to 2022. Over­all, Zam­bia has a re­wards score of 38.90 this quar­ter.

In­dus­try Re­wards

Zam­bia is a small tourism mar­ket and to­tal spend­ing by vis­i­tors is low, but our fore­casts show that it will expand from this low base over the forecast pe­riod to 2022. While growth in ar­rivals will be steady, growth in re­ceipts will out­per­form from 2018 in lo­cal cur­rency terms, as vis­i­tors see Zam­bia as a prime lo­ca­tion for ex­pen­sive safari and eco-tourism va­ca­tions and the kwacha grad­u­ally weak­ens against the US dol­lar. How­ever, the ex­pan­sion of the in­dus­try may be capped by the strong com­pe­ti­tion in Sub-Sa­ha­ran Africa: South Africa, in par­tic­u­lar, is a ma­jor ri­val in the tourism in­dus­try. Still, we as­sign Zam­bia a score of 37.50 for in­dus­try re­wards this quar­ter.

Coun­try Re­wards

The coun­try re­wards score takes into ac­count labour costs and in­fra­struc­ture. Zam­bia's score is ham­pered by the coun­try's un­de­vel­oped road, air and rail in­fra­struc­ture net­work, which means that there is lit­tle ac­cess to re­mote rural ar­eas. There are also chal­lenges in the labour mar­ket, in­clud­ing a lack of skilled work­ers. Con­se­quently, Zam­bia has a coun­try re­wards score of 40.99, around the re­gional av­er­age.


This sec­tion of­fers an eval­u­a­tion of in­dus­try-specific dangers and those em­a­nat­ing from the state's po­lit­i­cal and eco­nomic pro­file that call into ques­tion the like­li­hood of an­tic­i­pated re­turns being re­alised over the assessed time pe­riod. Zam­bia has an over­all risks score of 55.61, one of the re­gion's strong­est scores.

In­dus­try Risks

The in­dus­try risks score takes into ac­count short-term po­lit­i­cal sta­bil­ity, re­gional sta­bil­ity and vul­ner­a­bil­ity to ex­ter­nal fac­tors. Zam­bia's in­dus­try risk score of 63.64 is just above the av­er­age score for the re­gion. This re­flects rel­a­tive po­lit­i­cal sta­bil­ity and the prospects for stronger eco­nomic growth in the com­ing years. This score has been re­vised up­wards since last quar­ter.

Coun­try Risks

Our pro­pri­etary coun­try risks scores cover as­pects such as le­gal frame­work, bu­reau­cracy, mar­ket open­ness and se­cu­rity risks. Though there as some risks stem­ming from an over­spill of crime from neigh­bours and wide­spread do­mes­tic poverty, Zam­bia of­fers a rel­a­tively se­cure op­er­at­ing en­vi­ron­ment over­all, and there is a low threat from terrorism. Zam­bia's score of 49.04 is slightly above the av­er­age for the re­gion.

Source: Fitch So­lu­tions

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