DOES the noise in a market place stop people from flocking in and buying goods?
The noisiest market is often the most vibrant. Africa in general and Zambia in particular still has lots of potentials. Yet, given the social media vibe, one would think Zambia’s economic prospects are so bleak that no investor would want to bring their Foreign Direct Investment here.
But social media has given every person – reasonable or not – a platform to express their opinions on various issues, including economics. This is because there are no gatekeepers/editors on social media.
However, in-between the noise by social media, investors look at the fundamentals. If the indicators are good, they invest. That is why despite economic challenges the country is facing, 88 companies want to invest US$740 million in various sectors of the economy. The Zambia Development Agency (ZDA) says 88 investment licences were approved three weeks ago. Of the approved licences, 17 are owned by Zambians while 71 are foreign owned. This is an endorsement in the country’s economy because if the prospects were as bleak as social media has made the world believe, this country should not have been attracting investors.
Economist Chibamba Kanyama says the truth is the social media sentiment about the economy does little to sway public opinion. Mr Kanyama says social media sentiment merely provides a lead for investors to mine the data and authoritative voices. Once there is the negative sentiment in social media, investors will seek to verify authenticity, source and whether or not it is true. Investors are largely driven by authentic data such as opinions and policy decisions of those in authority, actions of other counterparties such as opposition political parties and other influencers who may influence public or political behaviour in a certain way. Investors have data about the external reserves, the gross domestic product projections, fiscal deficit, external and domestic debts and other information material for economic decision-making on the part of an investor.
Investors are also closely monitoring activities of economic agents, including Government, such as the current liquidation of Konkola Copper Mines. That is not a social media-driven sentiment, it’s a policy decision that affects investor decision. By and large, when economic fundamentals are well positioned or in proper motion, investors will come. When inflation levels, exchange rate and political situation are all stable, investors will come. Investors will also come if these variables are not stable but it is about the kind of investor. Resource-seeking investors such as those doing mineral prospecting only want assurance on property rights and stability of (fiscal) policy.
Despite what has happened to KCM, these investors are coming through because they are not only concerned about the current prospects but prospects in the future. Real investors know that even if things are not presently looking up, they will turn round tomorrow and it will be late to invest at the time values have come up. That said though, the ZDA and other players in the economy should be on guard against social media fake news, which could at times impact perceptions.
The stakeholders should provide readily available news and information platforms on which investors can get reliable information on which they can base their decisions. Clearly, Zambia is a good destination for investors but there is potential to have even more of them. They just need the right information, at the right time and in the right doses.