Mauritian company African Property Investments is building a $25 million complex with 10 000 m2 of commercial space in Solwezi.
The presence of three major copper mines, whose18 000-plus employees and contractors collectively release millions of dollars of disposable income into the local economy every month has attracted the investor.
The Solwezi City Mall has attracted tenants that include big-name brands such as Shoprite, Woolworths and Mr Price.
“Without the presence of the mines, Solwezi would not be a viable investment destination,” says Richard Herring, a spokesman for the company.
“They provide the pool of disposable income that makes shopping malls viable.”
On Solwezi’s doorstep is First Quantum Minerals’ huge Kansanshi Mine, whose operations in the area employ some 10 000 people (employees and contractors); an hour up the road, in Lumwana, is Barrick Lumwana mine, with 3 700 people; and two hours away in Kalumbila is FQM’s Sentinel Mine, with some 4 800 people.
By virtue of its proximity to the town centre, Kansanshi has the biggest effect on local consumer spending. But employees of Barrick Lumwana and FQM Sentinel make regular shopping trips to Solwezi too – either in their own cars, or in the buses laid on every week by the mines.
The presence of Solwezi City Mall – and the town’s other two smaller malls – has made a huge difference to shopping habits in the region.
Solwezi City Mall even attracts regular shoppers from across the border in the Democratic Republic of the Congo (DRC), where consumer goods are in short supply.
African Property Investments is no stranger to shopping malls in Zambia. Before building the Solwezi City Mall, the company had also built Kafubu Mall in Ndola, Cosmopolitan Mall in Lusaka and Mukuba Mall in Kitwe. These malls represent an investment of close to $180 million.
The developer’s success in Zambia did not happen overnight, and is based on extensive prior experience both in big cities and in mining towns.
“We’ve always liked mining towns, because of the disposable income,” says Herring.
And contrary to what one might expect, he says, mine employees prefer to spend their money in middle-to-high-end stores.
“People are aspirational; we’ve found that cheaper products at the lower end of the market don’t necessarily work.”
Knowledge of mines and mining also explains why African Property Investments pressed ahead with the decision to build the Solwezi City Mall, despite the downward trend of the copper price at the time and the impending crisis in global mining.
“Yes, the copper price was going down,” says Herring. “But markets recover. We are long-term investors.”
The valuable experience gained in Zambia has emboldened the company to expand into its next African market – the DRC. Herring acknowledges that the DRC is a far riskier proposition than Zambia, but he thinks the risk is overstated.
“In any event, risk means opportunity,” he says. “We’ve got a good model for our shopping malls. We know the major tenants. We believe that they will follow us into the DRC once they see that things are not as bad as they are made out to be.”
In the DRC, as in Zambia, the key investor attraction is mining.