"Much room for improvement in Zambian floriculture industry"
Floriculture in particular is ideally matched to a country that is projected to increase its population from 15-million to 25-million by 2030. The jobs return on the size of the investment and land usage is impressive: one job for a turnover of $10,000 annually and an initial investment of $20,000, compared to an estimated $250,000 investment per job with capital intensive mining.
Yet the industry in Zambia faces all manner of constraints.
The cost of airfreight amounts to half of the flower producers' direct costs. The high cost reflects the infrequency of flights north to Europe, and the cost of aviation fuel, aircraft handling and landing fees. Rather than offer assistance, the government has introduced more and more requirements and regulations and increased their fees for such services.
Power in Zambia, once plentiful and reliable, is subject to regular outages, with the state supply corporation Zesco now the back-up power source to farm generators, rather than the other way around. The flower business should be best thought of as an “export processing zone”, reflects one farmer responsible for 180-million sweetheart rose exports annually to Europe and the United Kingdom, where all inputs save water and labour are imported. Yet there are no exemptions on duty; in its place exists an inadequate lengthy impractical duty drawback scheme at the mercy of government’s bureaucracy, which has replaced the duty-free status once enjoyed by exporters. Even capital equipment is subject to the same system.
Moreover, the regional competition is not standing still. Why should it?
Kenya and Ethiopia are surging ahead in this sector, with 3,200ha and 1,850ha under cultivation respectively. Their wage rates are lower than in Zambia, they are closer to European markets, and their climate and altitude allows them to grow all year round.
While both enjoy regional airport hubs with plentiful flights, Kenya has even established a dedicated terminal at Jomo Kenyatta International Airport to support the flower business. Kenya’s cut-flower exports increased 12-fold to 137,000 tonnes between 1988 and 2014, now supplying one-third of the European Union’s imports. Now the world’s third-largest flower exporter, half a million Kenyans are dependent on the sector, which brings in $600-million annually.
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