comparative analysis of zambia and congo

7/30/2019 COMPARATIVE ANALYSIS OF ZAMBIA AND CONGO

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Assignment Topic:COMPARATIVE ANALYSIS BETWEEN CONGOAND ZAMBIA BASED ON DEMOGRAPHIC ANDECONOMIC INDICATORS AND SELECTION OF

FEASIBLE ALTERNATIVE

Submitted by:Sonia Tauhid

MSBAMb130200052


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Strategic Management: MGT 703

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CONTENTS PAGE #

1 Introduction 3

2 Product Portfolio 3

3 The Foreign Venture: A Critical Analysis 4

3.1 Comparison Of Demographic Indicators 4

3.2 Comparative Analysis Based On Demographic

Indicators

6

3.3 Comparison Of Economic Indicators 6

3.4 Comparative Analysis Based On Economic Indicators 8

4 Conclusion 10

5 References 12


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1. INTRODUCTIONLucky Cement Limited (LCL) is Pakistans largest producer and leading exporter of quality

cement with the production capacity of 7.75 million tons per annum. The company is listed on

Karachi, Lahore, Islamabad and London Stock Exchanges.Over the years, the Company has grown substantially and is expanding its business operations

with production facilities at strategic locations in Karachi to cater to the Southern regions, Pezu

and Khyber Pakhtunkhwa to furnish the Northern areas of the country. Lucky Cement is

Pakistans first company to export sizeable quantities of loose cement being the only cement

manufacturer to have its own loading and storage terminal at Karachi Port.

Lucky Cement is an ISO 9001:2008 and 14001:2004 certified company and also possesses many

other international certifications including Bureau of Indian Standards, Sri Lankan Standard

Institute, Standards Organization of Nigeria, Kenya Bureau of Standards and South African

Bureau of Standards.

2. PRODUCT PORTFOLIOOPC:

Ordinary Portland Cement (OPC) is used in all general constructions, especially in major and

prestigious projects where cement is needed to meet stringent quality requirements. It can also be

used in concrete mortars and grouts, etc.

SRC:

Sulphate Resistant Cement is more resistant to Sulphate attacks and is suitable for use in

foundations near seashore and canal linings. SRC has lower heat of hydration and its strength

satisfies.

Clinker:

Clinker can be easily handled by ordinary mineral handling equipment and can be stored for

several months without compromising on the quality. Clinker is the primary product in the

cement manufacturing process where limestone, clay and sand are grinded and heated, before the

gypsum is added to produce the final product of cement.

Block Cement:

By the nature of product, Block Cement is similar to the SRC, with a significantly darker color

and some low setting time to meet the requirements of the market and for the production of

blocks.


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3. THE FOREIGN VENTURE: A CRITICAL ANALYSIS3.1. COMPARISON OF DEMOGRAPHIC INDICATORS

Indicators Zambia Democratic Republic of the CongoPopulation 13,817,479 (July 2012) 73,599,190 (July 2012)

Age

Structure

0-14 years: 46.3% (male3,210,553/female 3,183,169)15-24 years: 20% (male1,382,475/female 1,384,868)25-54 years: 28.4% (male1,979,093/female 1,947,852)55-64 years: 2.9% (male188,412/female 205,783)

65 years and over: 2.4% (male144,145/female 191,129) (2012)

0-14 years: 43.9% (male16,285,752/female 16,052,701)15-24 years: 21.2% (male7,808,374/female 7,768,225)25-54 years: 28.8% (male10,569,903/female 10,622,413)55-64 years: 3.5% (male1,210,598/female 1,386,003)

65 years and over: 2.6% (male794,544/female 1,100,677) (2012)

Median Age Total: 16.5 YearsMale: 16.5 YearsFemale: 16.6 Years (2012)

Total: 17.6 YearsMale: 17.4 YearsFemale: 17.8 Years (2012)

Population

Growth Rate

2.89% (2012) 2.579% (2012)

Birth Rate 43.1 births/1,000 population (2012 ) 37.05 births/1,000 population (2012 )

Death Rate 13.4 deaths/1,000 population (July2012 )

10.8 deaths/1,000 population (July2012 )

Net

MigrationRate

-0.76 migrant(s)/1,000 population

(2012 )

-0.47 migrant(s)/1,000 population

(2012 )

Sex Ratio At birth: 1.03 male(s)/femaleUnder 15 years: 1.01 male(s)/female15-64 years: 1.01 male(s)/female65 years and over: 0.74male(s)/femaleTotal population: 1 male(s)/female(2011 )

At birth: 1.03 male(s)/femaleUnder 15 years: 1.01 male(s)/female15-64 years: 0.99 male(s)/female65 years and over: 0.72male(s)/femaleTotal population: 0.99male(s)/female (2011 )

Infant

Mortality

Rate

Total: 70.6 deaths/1,000 live birthsMale: 76.2 deaths/1,000 live births

Female: 64.8 deaths/1,000 live births(2012 )

Total: 76.63 deaths/1,000 live birthsMale: 80.36 deaths/1,000 live births

Female: 72.79 deaths/1,000 live births(2012 )

Life

Expectancy

At Birth

Total population: 52.57 yearsMale: 51.35 yearsfemale: 53.83 years (2012 )

Total population: 55.74 yearsMale: 54.28 yearsFemale: 57.23 years (2012 )

Total

Fertility Rate

5.85 children born/woman (2012 ) 5.09 children born/woman (2012 )

Nationality Noun: Zambian(s) Noun: Congolese


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Adjective: Zambian Adjective: Congolese or Congo

Ethnic

Groups

African 99.5% (includes Bemba,Tonga, Chewa, Lozi, Nsenga,Tumbuka, Ngoni, Lala, Kaonde,Lunda, and other African groups),

other 0.5% (includes Europeans,Asians, and Americans) (2000Census)

over 200 African ethnic groups ofwhich the majority are Bantu; the fourlargest tribes - Mongo, Luba, Kongo(all Bantu), and the Mangbetu-Azande

(Hamitic) make up about 45% of thepopulation

Religions Christian 50%-75%, Muslim andHindu 24%-49%, indigenous beliefs1%

Roman Catholic 50%, Protestant 20%,Kimbanguist 10%, Muslim 10%, other(includes syncretic sects andindigenous beliefs) 10%

Languages Bemba (official) 30.1%, Nyanja(official) 10.7%, Tonga (official)10.6%, Lozi (official) 5.7%, Chewa4.9%, Nsenga 3.4%, Tumbuka 2.5%,

Lunda (official) 2.2%, Kaonde(official) 2%, Lala 2%, Luvale(official) 1.7%, English (official)1.7%, other 22.5% (2000 Census)

French (official), Lingala (a linguafranca trade language), Kingwana (adialect of Kiswahili or Swahili),Kikongo, Tshiluba

Literacy Definition: age 15 and over can readand write EnglishTotal Population: 80.6%Male: 86.8%Female: 74.8% (2003 )

Definition: age 15 and over can readand write French, Lingala, Kingwana,or TshilubaTotal Population: 66.8%Male: 76.9%Female: 57% (2010 )

School Life

Expectancy

Total: 7 Years

Male: 8 YearsFemale: 7 Years (2000)

Total: 8 Years

Male: 9 YearsFemale: 7 Years (2009)

Education

Expenditures

1.3% of GDP (2008) NA

Urbanization Rate of urbanization: 3.2% annualrate of change (2010-15 )

Rate of urbanization: 4.5% annualrate of change (2010-15 )

Sanitation

Facility

Access

Improved:

urban: 59% of populationrural: 43% of populationtotal: 49% of populationUnimproved:

urban: 41% of populationrural: 57% of populationtotal: 51% of population

Improved:

urban: 23% of populationrural: 23% of populationtotal: 23% of populationUnimproved:

urban: 67% of populationrural: 67% of populationtotal: 67% of population

Major Cities

- Population

LUSAKA (capital) 1.413 million(2009)

KINSHASA (capital) 8.401 million;

Health

Expenditures

4.8% of GDP (2009) 11.2% of GDP (2009)

Physicians 0.055 physicians/1,000 population 0.11 physicians/1,000 population


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Density (2006) (2004)

3.2. COMPARATIVE ANALYSIS BASED ON DEMOGRAPHIC INDICATORS

Population and median age at is greater than Zambia. Moreover, male population of Congo under

the age of 15-24 years and 25-54 is also greater than male population of Zambia under the sameage classes by 1.2%, 0.4% and 0.6% respectively. This indicates that Lucky Cement Limited

(LCL) will have more chances to hire workforce easily in Congo. On the other side, population

growth rate, birth rate and death rate of Congo is less than Zambia by 0.311%, 6.05% and 2.6%

respectively. While, low birth rate and low death rate are included in demographic indicators of

development, which makes Congo comparatively more developed country. Net migration rate of

Congo is -0.47 migrant(s)/1,000 populations and of Zambia is -0.76 migrant(s)/1,000

populations, which indicates that if Lucky Cement Limited (LCL) enters in Congo then there

will be more chances of making accurate demand forecast. It can also be see that Congo has

more Infant Mortality Rate but Life Expectancy at Birth than Zambia. However if we compare

both states based on ethnicity and religion then we find that in Zambia also has Asians residents

and it has more Muslim population than Congo. Moreover, English is one of the official

languages of Zambia, so if Lucky Cement Limited (LCL) decides to select Zambia instead of

Congo for manufacturing activities then in future, there will be comparatively less

communicational problems. On the other hand, literacy rate in Zambia is also higher than Congo.

One of its reasons is that Congo does not spend on education while Zambia has 1.3% of GDP as

education expenditure. Expected rate of urbanization estimated from 2010 to 2015 of Zambia is

less than Congo. This indicates that in future Lucky Cement Limited (LCL) might have more

demand for its products. In Congo, there are more health facilities than Zambia, which is obvious

from health expenditure, and Physicians Density. Congo spends 11.2% of GDP and Zambia

spends only 4.8% of GDP on health expenditures.

3.3. COMPARISON OF ECONOMIC INDICATORS

Indicators Zambia Democratic Republic of the Congo

GDP

(Purchasing

Power Parity)

$23.68 billion (2012 ) $27.53 billion (2012 )

GDP - Real

Growth Rate

6.5% (2012 ) 7.1% (2012 )


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GDP - Per

Capita (PPP)

$1,700 (2012 ) $400 (2012 )

GDP -

Composition By

Sector

agriculture: 20.2%industry: 33.5%services: 46.3% (2012 )

agriculture: 38.4%industry: 25.9%services: 35.7% (2012 )

PopulationBelow Poverty

Line

64% (2006) 71% (2006 )

Inflation Rate

(Consumer

Prices)

6.5% (2012 ) 13.8% (2012 )

Labor Force 5.839 million (2012 ) 35.92 million (2012 )

Labor Force - By

Occupation

agriculture: 85%industry: 6%services: 9% (2004)

agriculture:NA%industry: NA%services: NA%

Unemployment

Rate

14% (2006 ) 50.3% (2012 )

Budget revenues: $4.092 billionexpenditures: $5.369 billion(2012 )

revenues: $3.383 billionexpenditures: $4.057 billion (2012 )

Industries copper mining and processing,construction, foodstuffs,beverages, chemicals, textiles,fertilizer, horticulture

mining (diamonds, gold, limestone,copper, cobalt, colt an, zinc, tin),mineral processing, consumer products(textiles, plastics, footwear, cigarettes),metal products, processed foods andbeverages, timber, cement, commercialship repair

IndustrialProduction

Growth Rate

8.8% (2011 ) NA%

Agriculture -

Products

corn, sorghum, rice, peanuts,sunflower seed, vegetables,flowers, tobacco, cotton,sugarcane, cassava (tapioca),coffee; cattle, goats, pigs, poultry,milk, eggs, hides

coffee, sugar, palm oil, rubber, tea,cotton, cocoa, quinine, cassava(manioc), bananas, plantains, peanuts,root crops, corn, fruits; wood products

Exports $8.346 billion (2012 ) $11.28 billion (2012 )

Exports -Commodities

copper/cobalt 64%, cobalt,electricity; tobacco, flowers,cotton

diamonds, gold, copper, cobalt, woodproducts, crude oil, coffee

Exports -

Partners

China 34.8%, Switzerland 18.2%,South Africa 7.8%, DemocraticRepublic of the Congo 5.4%,South Korea 4.4% (2011)

China 48.1%, Zambia 21.3%, US 9.5%,Belgium 5.4% (2011)

Imports $7.279 billion (2012 ) $9.237 billion (2012 )


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Imports -

Commodities

machinery, transportationequipment, petroleum products,electricity, fertilizer, foodstuffs,clothing

foodstuffs, mining and other machinery,transport equipment, fuels

Imports -Partners

South Africa 36.7%, DemocraticRepublic of the Congo 20.6%,China 10%, Kuwait 5.9% (2011)

South Africa 21.7%, China 16.2%,Belgium 8.5%, Zambia 7.1%,Zimbabwe 5.7%, Kenya 4.8%, France4.7% (2011)

Debt - External $5.445 billion (31 December2012 )$4.619 billion (31 December2011 )

$7.644 billion (31 December 2012 )$7.136 billion (31 December 2011 )

Exchange Rates Zambian kwacha (ZMK) per USdollar -5,120 (2012 )

Congolese francs (CDF) per US dollar -920 (2012 )

Fiscal Year calendar year calendar year

GDP (Official

Exchange Rate)

$20.68 billion (2012 ) $17.7 billion (2012 )

Central Bank

Discount Rate

8.39% (31 December 2009) ) 22% (31 December 2010 )

Commercial

Bank Prime

Lending Rate

13% (31 December 2012 ) 40% (31 December 2012 )

Taxes And Other

Revenues

19.8% of GDP (2012 ) 19.1% of GDP (2012 )

Budget Surplus(+) Or Deficit (-)

-6.2% of GDP (2012 ) -3.8% of GDP (2012 )

3.4. COMPARATIVE ANALYSIS BASED ON ECONOMIC INDICATORSGDP (Purchasing power parity) solves the problem of comparing GDP of countries with

different standards of living. It recalculates the value of a country's goods and services as if they

were being sold at U.S. prices. Through economic comparative analysis, we come to know that

GDP (Purchasing Power Parity) of Congo is higher than Zambia by $3.85 billion. GDP growth

rate measures how fast the economy is growing. It does this by comparing one quarter of thecountry's economic output (Gross Domestic Product) to the last. It is obvious from the table that

GDP - Real Growth Rate of Congo is greater than Zambia by 0.6%. GDP per capita is a

measurement of how prosperous a country feels to each of its citizens. Table shows that GDP -

Per Capita (PPP) of Zambia is greater than Congo by $1,300. If we consider contribution of

industry in GDP then it can be see that industry in Zambia contributes more to its GDP as
http://useconomy.about.com/od/grossdomesticproduct/p/GDP.htmhttp://useconomy.about.com/od/glossary/g/Per-Capita.htmhttp://useconomy.about.com/od/glossary/g/Per-Capita.htmhttp://useconomy.about.com/od/grossdomesticproduct/p/GDP.htm


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compare to contribution of Congos industry sector in its GDP. According to data collected in

2006 Congo is facing severe poverty problem than Zambia. Moreover, in Congo prevailing

inflation rate is 13.8%, which is greater than inflation rate in Zambia by 7.3%. The high poverty

level, high unemployment rate and high inflation rate shows that Lucky Cement Limited (LCL)

might get cheap labor in Congo. Besides it, regardless of less contribution of industrial sector in

GDP number of labor force in Congo is higher than Zambia. On the other hand, budget deficit of

Congo is $0.674 billion and -3.8% of GDP while budget deficit of Zambia is $1.34 billion and -

6.2% of GDP. One of the major industries of Zambia is construction while construction industry

of Congo is not so established. Therefore, Lucky Cement Limited (LCL) might face serious

competition in Zambia as there are three cement manufacturing companies including

Lafarge Cement ZambiaZambezi Portland Cement

Dangote (New Entrant into Zambian market, Breaking ground in 2012 with expected

production start up in 2015)

On the other hand, major industry in Congo is mining, mineral processing and consumer

products. While limestone and clay which are major raw materials for cement manufacturing

are easily available in Congo. If we consider international trade than Congo has exports of

$11.28 billion and imports of $9.237 billion while Zambia has exports of $8.346 billion and

imports of $7.279 billion. On the other hand, value of Congolese Franc is greater than value of

Zambian kwacha. 519 Congolese Franc is equal to 1 US-Dollar and 5,120 Zambian kwacha is

equal to 1 US-Dollar, while 98.95 Pakistani rupee is equal to 1 US-Dollar. It means that

Congolese Franc is stronger than Zambian kwacha. In order to compare income of two countries

we have to put them in the same currency units. In such situation, we use GDP (Official

Exchange Rate). GDP (Official Exchange Rate) of Zambia is $20.68 billion and of Congo is

$17.7 billion. Central bank discount rate of Zambia is less than Central bank discount rate of

Congo due to which commercial bank lending rate in Congo is also higher than Zambia. It means

that if Lucky Cement Limited (LCL) selects Zambia to form capital venture then it will get loan

from financial institutions comparatively with ease. Similarly, Taxes and Other Revenues of

Zambia are also greater than Congo.
http://en.wikipedia.org/wiki/Lafargehttp://en.wikipedia.org/wiki/Lafarge


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4. CONCLUSIONBy considering overall picture, we may conclude that Democratic Republic of the Congo is

feasible alternative as compare to Zambia for Lucky Cement Limited (LCL) to develop capital

venture. Due to high male population of Congo, Lucky Cement Limited (LCL) will have more

chances to hire workforce easily at low wages. By, considering low birth rate and low death rate,

more life expectancy and high health expenditures makes Congo more demographically

developed. Moreover, there is no much difference in literacy rate of both countries. Net

migration rate of Congo is less than Zambia, which will be helpful in demand forecasting if

Lucky Cement Limited (LCL) will enter in Congo. On the other hand comparatively higher

expected rate of urbanization it might be forecasted that in future Lucky Cement Limited (LCL)

will have more demand for its products in Congo. Besides it Congo is a central African country

so its location will provide aid to Lucky Cement Limited (LCL) to expand its market by

exporting to other countries in Africa.

On the other hand, overall situation ofCongos economy is also better than Zambia. It is obvious

from comparatively higher GDP (Purchasing power parity) and GDP - Real Growth Rate and

low budget deficit. Due to high inflation rate and high level of poverty, Lucky Cement Limited

(LCL) might get cheap labor. Moreover, Zambia already has three cement-manufacturing

companies, where Lucky Cement Limited (LCL) might face fierce competition. On the otherside, in Congo, there is a huge shortage of cement and Congo is a country, which has faced

severe destructions from civil war so there are many construction projects in pipeline. Congo has

emerged from a dreadful period of mismanagement, political instability, and conflict. However,

elections conducted in 2001 laid down the foundations of peace. Since 2003 pace of progress has

been accelerated. Therefore, Congo has a huge potential as a big market. More importantly in

Congo the limestone resources are substantial and we know availability of raw materialis one of

the major considerations for establishing manufacturing plant. Therefore, with that point of view

Congo is a best alternative. Besides it, currency value of Congo is also greater than Zambia. On

the other hand, tax revenue of Democratic Republic of the Congo is less than Zambias tax

revenue, which shows that tax structure of Congo is more flexible and tax rates are low. While

evaluating an investment project a major consideration of a company is low cost. Therefore, if

Lucky Cement Limited (LCL) decides to enter in the market of Congo then it has to pay less tax.


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In addition, having a coastline and better transport facilities also makes Congo more attractive

option as from Congo Lucky Cement Limited (LCL) can also export its products to neighbor

countries of Congo and expand its market. Although In short, after considering demographic and

economic indicators I suggest Democratic Republic of the Congo is better country for Lucky

Cement Limited (LCL) to enter in foreign market.


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5. REFERENCESWorld Bank. 2007. Main report. Vol. 1 of Democratic Republic of Congo - Country

assistance strategy : for the period FY08-FY11. Washington D.C.

http://www.indexmundi.com/factbook/compare/zambia.democratic-republic-of-the-congo

https://www.cia.gov/library/publications/the-world-factbook/geos/cg.html

https://www.cia.gov/library/publications/the-world-factbook/geos/za.html

http://en.wikipedia.org/wiki/List_of_companies_and_cities_in_Africa_that_manufacture_ce

ment

http://www.lucky-cement.com/index.php?option=com_content&view=article&id=80&

Itemid=76

www.uoguelph.ca/~geology/rocks_for_crops/19congo_drc.PDF
http://www.indexmundi.com/factbook/compare/zambia.democratic-republic-of-the-congohttps://www.cia.gov/library/publications/the-world-factbook/geos/cg.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/za.htmlhttp://en.wikipedia.org/wiki/List_of_companies_and_cities_in_Africa_that_manufacture_cementhttp://en.wikipedia.org/wiki/List_of_companies_and_cities_in_Africa_that_manufacture_cementhttp://en.wikipedia.org/wiki/List_of_companies_and_cities_in_Africa_that_manufacture_cementhttp://www.lucky-cement.com/index.php?option=com_content&view=article&id=80&%20Itemid=76http://www.lucky-cement.com/index.php?option=com_content&view=article&id=80&%20Itemid=76http://www.lucky-cement.com/index.php?option=com_content&view=article&id=80&%20Itemid=76http://www.lucky-cement.com/index.php?option=com_content&view=article&id=80&%20Itemid=76http://en.wikipedia.org/wiki/List_of_companies_and_cities_in_Africa_that_manufacture_cementhttp://en.wikipedia.org/wiki/List_of_companies_and_cities_in_Africa_that_manufacture_cementhttps://www.cia.gov/library/publications/the-world-factbook/geos/za.htmlhttps://www.cia.gov/library/publications/the-world-factbook/geos/cg.htmlhttp://www.indexmundi.com/factbook/compare/zambia.democratic-republic-of-the-congo

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