As risk appetite seeps back into the Africa’s second largest copper producer Zambia, more investment is evidently permeating the Southern Africa nation. AB InBev’s subsidiary, Zambian Breweries Plc (ZM:ISIN0000000078) has just announced its commitment to a US$80 million capital expenditure spend to double its output over the next 1.5 years to year end of FY2023 according to a stock exchange news communique on the local bourse.
“Zambian Breweries PLC will be investing up to US$80 million in Zambia towards a ground-breaking expansion program of Zambian Breweries’ current plant infrastructure. This will be funded through a combination of company funds, as well as from new and existing facilities to cover both foreign and local currency costs. In the short term we will use existing banking facilities with local Zambian banks that are already in place at existing terms. For the future we are looking at bank funding through local Zambian banks either through Term Loans or Revolving Credit Facilities for which negotiations have commenced.” (SENs extract)
The largest brewer in the Southern African nation aims to score a hattrick – increase shareholders value through profitability, add to the fiscal coffers in higher taxes and above all the ‘s’ in ESG, job creation that drives economic development.
“Zambian Breweries is proud to announce this major investment commitment to the Zambian economy. We are particularly pleased that we are forging an even closer partnership with the government of Zambia in support of its economic recovery and growth program. This investment will not only enhance our production capacity but will also significantly contribute to the wider national economy,” Zambian Breweries Country Director Michelle Kilpin said.
Over the last decade AB InBev’s subsidiary has invested under a half a billion dollars in capital investment and the additional commitment of $80 million forms part of the Lusaka Securities Exchange listed entities strategy of creating and sharing value. The investment is said to unlock innovation opportunities as the brewer seeks to scale exports higher yet reduced reliance on imports.
Zambian Breweries contributed K1.6 billion to fiscal coffers, generated K5.8 billion in sales and K1.0 billion to gross domestic product, creating 80,096 direct and indirect jobs equivalent to K164 million worth of labor income an Ernst and Young report revealed for 2019.
As part of its commitment to the United Nations’ Sustainable Development Goals (SDGs) and in line with AB InBev’s sustainability agenda, Zambian Breweries has over the years contributed towards sustainability initiatives such as supporting improved farming methods for small-scale farmers as well as in water resource conservation projects, and is committed to continue such support.
Zambian Breweries chairperson Monica Musonda said: “This new investment of US$80 million is another demonstration of Zambian Breweries’ long-term commitment and contribution to Zambia. We will continue to support efforts by the government to grow the economy through creation of employment opportunities, empowerment of local suppliers, distributors, retailers, farmers and entrepreneurs, and contributing to national revenues.”
Zambian Breweries continues to strategically equip itself for logistics opportunities and brewing capability through its Zambian Breweries Distribution Company and Zambian Breweries Ltd respectively.
The Kwacha Arbitrageur