When the Economics Association of Zambia proposed that Zambia aligns it’s vision 2030 to the electric car era, many did not think the need was as urgent as yesterday. The Future of Economic Diplomacy – Sustainable Development for Zambia and Africa theme was expounded at a two (2) day summit in Livingstone the tourist capital. Suggested positioning opportunities were from a copper supply perspective as an average electric car uses about 80kilos of red metal in cables while the lithium battery has significant portions of manganese and cobalt to facilitate power storage.
It explains why the Democratic Republic of Congo (DRC) being the latest cobalt prouder globally has stepped up efforts to produce more than 66,000 metric tons of blue metal annually but is entering into cobalt forwards with European car manufacturers to book cash flows into the next 10 years when electric cars will ferociously replace fossil fuel propped vehicles. Higher exploration investments are currently being made into cobalt mining in DRC.
One of the challenges that the National think tank (EAZ) threw to diplomats, was the roles they should play in using economic diplomacy as a tool for opportunity visibility for Zambia to the outside world thereby indirectly driving growth. Zambia’s mineral resource endowment has been underestimated for a long time but the time is so precise to position ourselves for the cobalt, manganese and copper boom aligned to the 2030 development goals aligning to the lithium battery and electric car era. This would then allow for direct agreements between the nation with Daimler Chrysler, Ford and BMW for supply of these electric car minerals. In so doing the country would be addressing its weak earnings capacity that would improve strategic reserves.
One such exemplary diplomat is Zambian Ambassador to Austria Anthony Mukwita who has and is still using economic diplomacy in Europe to explore the reality of electric car era opportunities because after the EAZ summit, he did engage with European car manufacturers. That’s the role diplomats should play in foreign service as they leverage opportunity to ignite economic growth. Another exemplary Ambassador that has been actively maximizing economic diplomacy is Zambias Ambassador to Ethiopia Emmanuel Mwamba who is and has always sought commercial opportunities wherever he is to influence flows into Zambia. Mwamba has been instrumental in conducting South African farmers and technology company’s into Zambia over the years.
How the electric car era is a hedge for fossil fuel volatility? One angle that was not fully exhausted on the electric car option was that, not only does it reduce dependency of fossil fuel which greatly impacts climate change, but it offers a perfect alternative to fossil fuel cars, a hedge for fuel price volatilities for oil importing nations.
With crude price bulls supported by OPEC+ member state supply curbs and rekindled growth prospects in China and the U.S given the easing trading war pressures, oil importing nations will need to brace themselves for stronger oil prices. Stronger oil prices is a blessing for producers and a curse for net importers.
So then where is Zambia vis electric car era? Cabinet in 2018 had a approved the drafting of the electric car policy framework which needs to be executed urgently. This was a proposal pushed through the Ministry of Transport and Communication. Zambian entrepreneurs such as Amilak Investments Specialized in e-mobility solutions have already positioned themselves for the supply of electric cars which was showcased last year to the Ministry of Commerce Trade and Industry.
Electric cars will spur demand for electricity. Electric cars will need charging ports which will in-turn require electric current an opportunity for the power utility to tap into. This will widen earnings base and create employment opportunities for Zambians ready to tap into this curve.
It is clear that energy reforms looked at holistically with frameworks for the electric car should then provide the opportunity for investment off course in line with cost reflective and optimal tariffs for ZESCO if Zambia ever thinks of getting investment influx in the energy sector.
Other longer term interventions to ease the impacts of fuel price volatility include:
Modernizing electric train and commuter system. Electric train commuter system reduces dependence on fossil fuel propelled transport and will increase lifespan of tarred roads. However this project opportunity requires a large funding outlay in excess of $3billion as was implemented in Ethiopia. This option is long overdue for most African states. These are the sorts of projects that should characterize infrastructure spend going forward.
Expedition of the block 32/31 oil and gas exploration. Zambia’s oil exploration projects in the Rift Valley will ease cost pressure should they test positive for crude. Kenya is a good example of a Rift Valley nation that has discovered crude and made its first export this year.
Ethanol processing opportunities. A positive take away from the expos that the Ministry of Commerce facilitated last year and part of this year is the level of investments in ethanol processing led by Sunbird. The project has seen flows of $100million so far and this upon completion will ease Zambia’s import costs on crude. The ethanol option could be a diversification opportunity for Zambia Sugar I aligned to climate change resilience to produce ethanol which can be a substitute for fossil fuel generated ethanol.
Investment in (clean energy) heat recycling technology. At a time when power deficits are rampant usage of diesel to power generators is on the rise and is an enormous cost. There is need to invest in technology that allows for data center heat to be recycled into energy that will reduce dependence on fossil fuel. These technologies are widely used in Germany and Scandinavian countries.
Operationalization of energy reforms. With the recent approved energy reforms many wait to see how electricity cost reflective and optimal tariffs will play out to achieve the investment influx into the energy sector while the divorcing of government from petroleum procurement ideally should reduced costs along the long value chains to achieve cost efficiency in the fuel process to manifest in lower costs of fuel going forward.
The reality is that the world is slowly shying away from fossil fuels and moving onto cleaner energy alternatives which will save the planet not only through climate change resilience but at a lower cost. Zambia should start considering shifting its investment appetites to the sustainable development goals 2030.
The writer is a Financial Analyst and Economist serving as National Secretary for Economics Association of Zambia. Mutisunge is a seasoned banker with over a decade and half experience.
