Why Companies Are Not Investing In Zambia; Capital Follows A Path of Least Resistance, says US

By Kalata News

Lusaka, May,2025 – INVESTMENTS follow countries where there is good governance and respect for business environment, says the United States Ambassador to Zambia, Michael C. Gonzales.

In a speech entitled ‘Promoting a Competitive Business Enabling Environment to Foster Investment-led Development and Growth in LDCs’ delivered in Lusaka in April, Mr. Gonzales said capital was like water that follows a path of least resistance.

He said having lived in and worked among least developed countries, much of the difference between countries that attract investment and those that do not is a matter of government orientation.

He said from Ethiopian coffee to Chilean mining, those countries and sectors that create conducive environments to foster innovation and business within a transparent and stable policy environment – using government to enable business while monitoring and enforcing compliance – are the countries best able to unleash their potential.

“In this competitive global economy, capital is like water, it follows the path of least resistance.  Companies do not just wait for the opportunity to invest in your country. They will invest somewhere. But, if your country makes it difficult, they will go elsewhere,” said Mr. Gonzales.

 

He added, “I often hear governments complain that investors are not serious.  “Just look at the massive potential that exists,” they lament.  The reality is that while the potential is significant, the costs of realizing that potential continues to outstrip it.  Put another way, potential revenues are great, but the costs of realizing a profit remain higher still.”

Recently, the US Government cut down about USD50 million worth of medical assistance to Zambia due to pilfering and theft of these drugs.

The ambassador said accountable companies were not necessarily looking for a special deal, they seek transparent, consistent, and predictable policies and processes that provide a level and stable playing field to minimize risk.

“In a world where time is money, one-stop shops and automated processes help reduce opportunity costs.  A new market entrant’s first stop is typically to talk to others already in the market.  If what they hear is about corruption, byzantine processes, and long delays, they may not even stick around to meet with your governments or actually opportunities.  So, the first key to attracting new trade and investment is to facilitate business practices for those companies already in your market,” he said.

Mr. Gonzales said having lived and worked among the least developed countries in the world, from Bangladesh to Ethiopia to Malawi to Nepal, he has seen that it is not governments or donors who create growth. He said responsive governments can provide the conducive environment, and donors can provide much needed support.

“But, ultimately it is private sector investment that drives growth.  It is investment that creates jobs, drives productivity, and pays taxes to fund public services,” he said.

He offered the US Government support to advise on prospective business process reforms or regulations, so too are other partner countries or multilateral partners like the World Bank adding that “a true partner is not one that insists on non-disclosure agreements or wants special benefits for themselves but genuine partners are those who support you in creating level playing fields where transparent processes ensure investor confidence and foster competition to bring both the companies and your people value for money.”