International Marketing

Dus entry in Zambias telecommunication market

AneteThomasK
5132654

Overview
DuispreparingtoentertheZambiantelecommunicationspacetoofferahostof
variousserviceswhichinclude,butnotlimitedto;mobileservices,broadbandand
TVsolutions.

Indicatorselection
TheselectionofindicatorsforDusopportunitytostartandexpandbusinessin
Zambiafallsundertwobroadsegments.
Thisincludesthemacroenvironmentrelatingtothegeneralbusinessenvironment.
Thisincludesseveralaspectssuchastariffs,exchangecontrol,productregulations
etc.
TheotherpartincludesmicroenvironmentswhichaffectDusintroductionof
servicessuchasconsumptionexpenditure,creditgrowth,importsandexportsinthe
countryetc.
GeneralCountryIndicators:

Thevarioustradepoliciesinthecountryhasremainedunchangedsinceits
reformprogram.Thisincludedremovingofexchangecontrols,areduceintheduties

forimporting,removingvariouslicenserequirementsforimportingandexporting,
andleavingpricecontrolling.AccordingtoWorldBankTradeTariffRestrictiveness
Index,thecountrystradeiseasiertodealwiththanitsaverageAfrican,lowincome
countries.
TheMFN(MostFavoredNation)tariffis13.4%,notmuchhasbeenchanged
sincethelate1990s,butthecountryhasbeendoingitsparttohavefavorabletrade
policiestolowertradebarriers.Eventhoughtherehasbeenahugedifference
betweentheboundrate,whichstandsat105.7%,theappliedratehavenotbeen
increasedovertheperiodoftime,accordingtotheZambianauthorities.Advalorem
tariffsmakeupabout98%oftheoveralltarifflines,whichgivesusahigh
transparency.
growthwouldbeinfluencedbyincreasesinsavingsandproductivity
resultingfromrisesincapital."(Domar,1946)
ZambiashouldlookforwardtoitsFDIpoliciestohaveaeconomicandsustainable
growth.AresearchbyAlfaroetal(2003)arguesthatalthoughtheeffectsofFDIon
growthmaybeunclear,ithasapositiveeconomicimpact,inthiscaseforZambia.As
Craigsaid(2001),theZambiangovernmenthadfailedtomaximizetheprofitability
oftheminingindustry.Theirstrategyledtoprivatizationinthecountrycallingfor
investment.
Kogidetal(2014)studiedtheimpactofFDIontheeconomicgrowthin
Malaysia,andcametoconcludethat"findingswerethatFDIdidhaveasignificant
impactontheeconomyofMalaysia."

Zambiabelongstooneofthemostinefficientcountriesintheworld,whenit
comestocustomsoperations.Itrequiresmoredocuments,processingtimeandimport
costscomparedtoitscounterpartcountries.However,withinthelistofcountriesthat
wehavechosen,itremainstobetheidealpickovertherest.
Thecountryhasimplementedamultifacilityeconomiczone(MFEZs),which
providesincentivesforbusinessestosetupinthecountry.Thiscomesunderthe
implementationoftheZambiaDevelopmentAgency(ZDA),afterscrapingoutthe
olderInvestmentAct.
TheZDAalsoplanstoprivatizethetelecommunicationsectorinthecountry.
ThiswouldbeahugeboostforDutostartitsimplementationinthecountry.Fixed
linetelecommunicationservicesprovider,Zamtel,hasbeengoingthroughadown
turn,andislookingforastrategicparynet.ThisisalsoworksinfavorforDutomake
anentryintothemarket.
Asindicatedinthetablebelow,TheZambianeconomyhashadadeclineinits
GDPratefromabove5%in2014tounder4%in2016.(WorldBank,2014).The
GDPgrowthdoesnthaveafullydirectinfluenceontheimpacton
telecommunicationservices,however,ifwelookatthepercapitaGapofthecountry,
ithasincreased.ThismayhaveapositiveeffectonDusoutlookininvestingin
Zambia.
Contrarytothis,theinflationratehasbeenincreasingoverthelastcoupleof
years.ThismayhaveanegativeeffectonDusimplementationinlaunchingthe
country.But,totacklethisproblem,thegovernmenthasvariouspoliciessetinplace
toeaseinvestmentscomingintothecountry.Thisincludestoincreaseprivatization
withinthecountry.

ProductMarketPotential
Theconsumptionexpenditurehasincreasedovertheyearsover100%overthe
lastdecade.Thecountryhasseenadipandincreaseinitsimportingandexporting
segments,astrongindicatorthatthemarketisopeninguptoinvestments.
AspartofthecountrysnationalstrategyVision2030,itaimstotransform
Zambiaintoaninformationandknowledgebasedsociety.Thecountryalso
providesfinancialsupportthroughZambiaInformationandCommunications
TechnologyAuthority(ZICTA),fortheaccessofInformationandcommunication
technology(ICT).AsHabeenzumentions,TheZambiantelecommunicationsector
issettorevive(Habeenzu,2010)
AccordingtotheBankofZambia(BoZ),in2015,domesticforeignexchange
fellshortinthecountry.Atthesameperiod,domesticcreditgrewtoabout13%
comparedtothepreviousquarter.(newsroom,2015)Thecentralbankintervenedto
minimizethevolatilitywithforeignexchangemarket,thankstostrongdemand.
Dr.Kalyalya,GovernorofBankofZambiasaidthat,risingdemand,amidst
lowersupplyandstrongerUSdollarledtotoaweakerKwachaagainstforeign
currencies.

Source:3.4,8CountryReport2016(EIU)/|5:ZambiaLabourForceSurveyReport,2014
(CSO&MinistryofLabourandSocialSecurity)|6,19:TheWorldFactbook(CIA)/Census2010/
10:NationalAccountsMainAggregatesDatabase(UNstat)|1113.15,17:MonthlyBulletin
(CSO)|15,16:TradeStatisticsofJapan(MinistryofFinance)|1718:MinistryofFinance/Bankof
Zambia/18:BankofZambia|1920:ICT(ZICTA)

Source:ICT(ZICTA)

Infrastructurerequirements
Media:

ZambiaoffersahostofmediaoptionsthatcouldbeexploredtoexpandDus
businessoperations.Thisinclude,butnotlimitedtonewspapers,TV,theinternetetc.
Thecountrydoesnthavehighnumberswhenitcomestomediapenetration,for
exampleveryfewpeoplehaveaccesstothem.
Sameappliestoothermediasources.But,incontrast,theamountofpeople
whoareexposedtothemediasourcesarehigh,thankstosharing/viewershipand
highliteracyratescomparedtotheothercountries.(

Knowledgeeconomyreadiness:
ZambialiesinthebottomlotoftheKnowledgeEconomyIndex,assuchit
aimstoincreaseitsrankings.AsBwalya(2010)hasmentionedinhisarticle,
.Zambiaisstrivingtowardsbecominganinformationsociety,onethatisbasedon
knowledgeandtechnology.WithDusentryintothemarket,itwillempowerand
providetowardstheeconomyandalignwiththecountrysvision.

Availabilityoffinancing:
Thecountryhasmanyestablishmentsthatcouldprovidecreditforfinancingin
thecountry.Zambiahasdecreasingexchangerateagainstforeigncurrencies,which
meansinvestinginthecountrybecomescheaper.Providingfinancingforvarious
businessesalsoresultinstrengtheningoftheeconomyforZambia.

Conclusion
Lookingatthevariousfactorsthatimpactabusinesstobesetupinthe
country,therearepositiveandnegativeaspects.IfwelookattheGDPofthecountry,
wecancometotheconclusionthatitsslowingdownandthatitmayhavea
negativeveimpact.
WealsohavetakeintoconsiderationourproductandservicesthatDuwill
offerwhichwillsignificantlyaffecttheoutcomethesefactorsmighthaveonDu.
Consideringthatcountryisstilltryingtocomeoutofaeconomicdownturn,its
visionfortomorrowandtheeasingupoftraderestrictionsandlicensing,Ifeelthat
DushouldconsiderinvestinginZambia.
Notonlyithasthevariousfactorsthatworkinitsfavor,suchaincreasein
demandoftelecommunicationrequirements,buttheshifttothatofaknowledge
basedeconomy,duetodeclineinexportsfromitsmajorcoppersector(Craig2001)
alsoimpactstheneedforbetterservicesinthecountryonethatrequiresa
sustainableprovider,onethatDucouldbe.

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