GOVERNMENT’S ECONOMIC TRENDS

IN ZAMBIA.

ENTERPRISE DEVELOPMENT SUPPORT

SYSTEMS AVAILABLE IN ZAMBIA.
In this segment, we are going to
discuss two support systems that
have been created by the Zambian
Government to help entrepreneurs
create and develop their enterprises.
These are namely:-
(a) The Citizens Economic
Empowerment Commission (CEEC).
(b) The Zambia Development Agency.
FORMATION OF THE CITIZENS ECONOMIC
EMPOWERMENT COMMISSION.
• Since independence, the Zambian Government has always been
interested in the economic empowerment of its citizens. This is
shown or reflected in its National economic transformation
programme enshrined in its policies and strategies.
• Such economic transformational initiatives included the 1968/69
Mulungushi Economic Reforms, the Zambianization programme
and the Matero Economic Reforms of 1969. In the 1990’s, the
Government implemented the privatization programme that was
aimed at transferring the majority of state assets (firms) to the
private sector in which Zambian citizens were also to participate.
- The above initiatives did not achieve Government
expectations because of various factors such as:-
(a) Limited absorptive business capacity among Zambians.
(b) Lack of entrepreneurial capacity among Zambians.
• In order to solve or reduce the above imbalances in the
economy, the Government decided to create an
economic empowerment POLICY that eventually lead to
the enactment of the Citizens Economic Empowerment
Act (CEE) number 9 of 2006. The policy was aimed to
ensure ownership and control of the means of
production was in the hands of the Zambian citizens.
 FORMATION OF CEEC….
CONT’D.
- The CEE Act of 2006 established the Citizens Economic
Empowerment Commission. The Commission is a body
corporate (it can sue or be sued).
MANDATE OF THE CEEC:
The mandate of the Citizens Economic Empowerment
Commission is to :
- Promote broad based and equitable economic empowerment
of citizens that are or have been marginalised or disadvantaged.
- Empower citizens whose access to economic resources and
development capacity has been constrained by factors such as
race, sex, educational background, status and disability.
 THE DISIRE OF GOVERNMENT:
• Through the CEEC, the government desires to transform Zambia into a
nation where targeted citizens fully participate in the economic affairs of
their country.
• Targeted citizens are Zambians who historically have been either
marginalized or disadvantaged and have no access to economic resources
or opportunities.
The following are targeted:-
(i) Citizens influenced companies are those companies that have allowed
between 5% and 25% citizens’ ownership participation.
(ii) Citizens Empowered companies are those companies in which citizens’
ownership participation ranges from 25% to 50%.
(iii) Citizens owned companies are those companies in which citizens’
ownership participation is above 50%
 BUSINESS GUIDELINES OF
CEEC.
There are procedures and guidelines for obtaining an
investment licence in Zambia such as, among others:-
(a) Completed formal application FORM from the Zambia
Development Agency.
(b) Certified copy of Certificate of Incorporation or
Registration.
(c) Business plan or and feasibility study.
(d) Non-refundable application processing fee of K1,280=00
The above documents must be submitted by anyone wishing to
apply for an investment licence.
 THE OBJECTIVES OF THE ACT.
a) The establishment of the citizens Economic
Empowerment Commission.
b) Establishment of the citizens Empowerment Fund.
c) Promoting the empowering of targeted citizens.
d) Promoting investment through fostering JOINT local and
FOREIGN ownership of Companies (Joint Venture
establishment)
Government strongly encourages ( through this ACT) sectors
and enterprises to develop agreements that will set out
specific CEE targets and outline the plans to achieve targets.
 In executing its mandate, the CEEC has anchored its programmes and
activities around the following NINE (09) pillars of empowerment:
(1) equity/ownership, management and control.
this pillar targets:-
- Citizens influenced companies(5-10%).
- Citizen empowered companies (25-50%).
- Citizen owned companies (50%).
(2) Preferential procurement.
At least 50% of Government and Private sector expenditure should go to
empowered companies.
(3) Skills Development.
Improve education and enhance ability to adopt modern business
practice.
 Pillars of empowerment….
cont’d.
(4) Access to finance:
Establish the Citizens Economic Empowerment Fund, a special purpose vehicle to
finance CEE.
(5) Transformation of society:
To provide supportive culture, entrepreneurship for sustainable CEE.
(6) Corporate and social Responsibility:
Encourage companies and communities to partner and uplift communities.
(7) Good Political and Corporate Governance:
Creation of predictable legislation and regulations for transparency and
accountability.
(8) Greenfield Investments:
Promote investments and partnerships between local and foreign investors.
(9)Foreign Direct Investment:
Encourage a foreign and local partnership approach to achieving CEE
ESTABLISHMENT OF THE ZAMBIA
DEVELOPMENT AGENCY (ZDA).
• The Zambia Development Agency Act no11 of 2006 established the Zambia
Development Agency.
• The ZDA is a body corporate.
• The ZDA is a merger of the following institutions:
(a) Zambia privatisation Agency.
(b) Zambia Investment Centre.
(c) Export Board of Zambia.
(d) Zambia Export Processing Zones Authority.
(e) Small Enterprises Development Board.
The above merged institutions started working or operating as one institution
(ZDA) after 1st January 2007.
 EXPECTATIONS OF THE ZDA.
• Since inception, the Agency has always expected investments in the following
areas or sectors:
(a) Financial.
(b) Mining.
(c) Cement.
(d) Fertilizer production.
(e) Agriculture.
The expectations were based on the following:-
(f) Favourable Government economic policies that have been created.
(g) Macro economic stability.
(h) Political/peace stability experienced in the country.
(i) The country’s strategic location. (SADC and other regional markets- The Great
Lakes Region ).
POLICY STATEMENT OF ZDA REGARDING MICRO
SMALL AND MEDIUM ENTERPRISES (MSMEs) SECTOR.

• The ZDA is committed to the development of this sector. It forms a large

portion of the economic players in the economy and the Agency will ensure
that the sector grows and contributes significantly to the Zambian economy.
WHAT ZDA PROVIDES TO MSMEs
It provides the following:-
(a) Investment facilitation.
(b) Market development.
(c) Business development.
(d) Support services.
 ZDA’S STRATEGIC GOALS.
They are as under, among others:
(a) To promote and facilitate business enterprise
development.
(b) To create investor confidence in Government support
for private sector lead economic development.
(c) To provide and facilitate support to the micro and
small business enterprises.
WHY SHOULD ENTREPRENEURS
INVEST IN ZAMBIA ?.
The following factors should motivate them to invest in
Zambia:-
(i) The removal of exchange control Regulations.
(ii) The deregulation of prices and interest rates.
(iii) No restrictions on the repatriation of profit, dividends
and capital.
(iv) An energetic PRIVATIZATION programme that provides
for the continued privatization of state assets.
(v) Investment protection and guaranteed private property
rights.
INVESTMENT INCENTIVES OFFERED BY ZDA TO
INVESTORS:
• The ZDA Act provides for the investment thresholds that have to be
met to qualify for fiscal and non-fiscal incentives.
FISCAL INCENTIVES:
The following are incentives or entitlements applicable to investors who
invest not less than US$500,000 in the multi-facility Economic zone,
Industrial Park, or a Priority Sector under the ZDA Act:-
(a) Zero percent tax on dividends for 5years from year of first
declaration of dividends.
(b) Zero percent tax on profits for 5 years from the first year of
operation.
(c) Zero percent import duty rate on capital goods, machinery including
specialized motor vehicles for five years.
 NON-FISCAL
INCENTIVES.
In addition to the above fiscal incentives, the above category of investors
(those that invest not less than USD 500,000=00) are entitled to the
following non-fiscal incentives as well:-
(a) Investment guarantees and protection against state nationalization.
(b) Free facilitation for application of immigration permits, secondary
licences, land acquisition and activities.
Non-fiscal incentives are applicable to investors that invest an amount not
less than US$250,000 in any sector or product not provided for as a
Priority Sector or product under the ACT.
• The certificate of registration is valid for ten(10) years from the date of
issue.
• The investor may apply for renewal of the certificate of registration
before its expiry.
 INVESTMENT SECURITY:
(a) The Investment Act of 1993:
states that “Investments may not be expropriated UNLESS
Parliament has passed an Act relating to the COMPUSORY
acquisition of that property”
In the event of the above, full compensation at market value and
free transfer of the funds is guaranteed.
(b) The Securities Act of 1993:
This Act protects investment in the Stock Market.
(c) In case of disputes:
Arbitration may be sought through the Zambia High Court and/or
other fora.