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III.

TRADE POLICIES AD PRACTICES BY MEASURE(1)ITRODUCTIO

1.
Trade policy has remained substantially unchanged since Zambia undertook a comprehensive
reform programme in the 1990s, removing exchange controls, reducing import duties, eliminating
import and export licence requirements, abolishing export bans and introducing a number of export
incentives, removing subsidies, and decontrolling prices. According to the World Bank's Trade Tariff
Restrictiveness Index, Zambia's trade regime is more open than that of an average sub-SaharanAfrican or low-income country.1 The simple average applied MFN tariff of 13.4% has dropped only
slightly since the late 1990s, but Zambia continues to work toward lower trade barriers, especiallythrough the COMESA and SADC free-trade areas. The large gap between the average applied rate of
13.4% and the bound rate of 105.7%, and the absence of bindings for over 83% of tariff lines, createsa degree of unpredictability for traders in the sense that there is scope for the authorities to raise
tariffs, although, with one notable exception, applied tariffs have not been increased during the review
period according to the authorities.2 Ad valorem tariffs account for 97.8% of all tariff lines, whichlends a high degree of transparency to the tariff, although for the remaining 2.2% (up from 1.3% in2002) ad valorem equivalents are not available and tend to conceal relatively high rates.
2.
In terms of customs operations, Zambia remains one of the world's least efficient countries
according to the World Bank classification scheme.3 It ranks 153rd out of 181countries, due to thehigher number of required documents, considerably longer processing times for exports, andrelatively high per container export and import costs compared with those of an average sub-SaharanAfrican or low-income country. One of the main technical assistance efforts to improve this situationis the U.S. Millennium Challenge Corporation 2006-2008 programme4, to promote economic
governance by reducing barriers to trade and investment through: building capacity in modern
customs tecghniques and integrated border control; strengthening the capacity of SPS units to provide
services for local and export trade; and strengthening the standardization, certification, and inspection
units of the Zambia Bureau of Standards.
3.
In order to not to impede exports, Zambia has duty drawback schemes and it is possible tomanufacture under bond in a bonded warehouse. Apart from exemptions, the most important of
which apply to mining inputs, not much use is being made of these facilities. The duty drawback
schemes suffer from delays in processing claims and refunding tariffs, and the Government frequently
runs out of funds to finance these refunds.
4.
The authorities have abandoned efforts to establish export processing zones, instead focusing
on establishing multi-facility economic zones (MFEZs) which offer a wider set of incentives to both
exporting and non-exporting enterprises. With the recent replacement of the Investment Act by the
Zambia Development Agency (ZDA) Act, investment incentives based on tax holidays wereintroduced in early 2007 for companies operating in MFEZs and a long list of priority sectors. While
additional investment is needed, international experience demonstrates that investors give lower
priority to tax incentives than to a competitive investment climate generally.

1

World Bank (2008e).
The customs duty on cellular phone handsets was increased from 5% to 15% in the 2009 Budget toencourage local production of handsets.
3
World Bank (2008a), p. 2.
4The objective of the programme was to reduce the number of days required to export products from60 to 30 and the number of days required to import products from 62 to 30.
2

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Trade Policy Review

5.
In 2008, Zambia enacted the Public Procurement Act, which repealed the Zambia National
Tender Board Act with the result that the Zambia Public Procurement Authority has issued newthresholds. Zambia is not a member of the WTO Government Procurement Code. Since the early
1990s, the private sector has played a greater role in the national economy, following a privatization
programme initiated to accelerate the development of the private sector. Prior to privatization, theState controlled over 80% of the country’s productive and service-related activities, a share that is
now seemingly reduced to between 10% and 15% as, according to the authorities, the bulk of thegovernment-owned mining companies were privatized. The Zambia Development Agency (ZDA)
succeeded the Zambian Privatization Agency in January 2007 as the country’s privatization vehicle.
Plans to privatize energy and fixed-line telecommunication services may encounter problems as
productivity in both subsectors requires urgent improvement.
6.
The authorities are drawing up a national policy on intellectual property, with outside
assistance, and have stepped up efforts to combat trade in pirated and counterfeit goods.
(2)

MEASURES DIRECTLY AFFECTIG IMPORTS(i)

Customs procedures(a)Administration

7.
Customs administration in Zambia is under the responsibility of the Customs and Excise
Department of the Zambia Revenue Authority (ZRA). The department has undergone significant
changes in the context of a Customs Reform and Modernization Program linked to theimplementation of ASYCUDA++.5 The Customs and Excise Department is responsible under the
Customs and Excise Act, Chapter 322, for the following: collection of customs and excise duties andother taxes; licensing and management of registered excise manufacturers; licensing and control ofbonded warehouses; regulation and control of imports and exports; facilitation of trade, travel andmovement of goods; carrying out of controls on behalf of other government ministries; provision of
trade statistics; and protection of society.
8.
An importer wishing to challenge a customs-related determination can appeal to the Revenue
Appeals Tribunal, established under the Revenue Appeals Tribunal Act of 1998. Appeals are
accepted on issues related to customs valuation, customs classification or a refusal to license. Appeals
to the Tribunal’s ruling can be made to the High Court; final appeal is to the Supreme Court.
(b)Import documentation and procedures

9.
Under Section 32 of the Customs and Excise Act, all imports must be cleared at the point ofentry through approved customs-clearing agents unless the importer is authorized by the ZRA to
selfclear. When the entry and relevant supporting documents have been registered and accepted by
ZRA Customs, taxes are assessed, and a processing fee of K 50,040 is added to cover the costs of theASYCUDA system application, and of Necor, a private agency that processes the entry declaration(form CE 20). Customs may call for a physical examination or additional documentation to ensurethat a declaration is correct. An invoice is issued for immediate payment for the goods to be released,
5

Zambia uses UNCTAD's Automated System for Customs Data and Management (ASYCUDA)
declaration-processing system. The ASYCUDA++ system has recently been introduced and provides for
streamlined customs clearance procedures. AYSCUDA ++ also has a risk module that suggests a particular risk
profile for each shipment: green – no inspection, yellow – inspection of documents, blue – post audit, red –physical and document inspections. When fully implemented, the ASYCUDA national system is to be fully
linked to the COMESA regional centre.

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and, when all formalities are concluded and payment has been made, Customs will issue a releaseorder for the goods.
10.
According to the authorities, customs clearance is usually accomplished within a few hours,
providing that all documents are in order. Subject to documents being in order, the ZRA states thatclearance can be achieved within 8 hours for major clients who use credit account facilities to pay
their taxes; however, a random check (carried out in the context of the DTIS) at the Chirundu borderrevealed waiting times of 2-4 days. At Lusaka airport, it has been reported that shipment clearance
may take up to 4 days.
(c)Customs valuation

11.
Zambia applies tariffs on the c.i.f. value of imports. According to the authorities, the dutiablevalue of goods is always considered to be not less than the f.o.b. price of the goods to the importer.
Since 2000, the principal methods used for customs valuation have been based on the transaction
value, i.e. the price actually paid or payable when a good is sold for export to Zambia. Where thetransaction value cannot be ascertained, the price actually paid for similar goods, adjusted for
differences in cost and charges based on distance and mode of transport, is determined as thetransaction value.
12.
While ZRA began to implement the WTO method of valuation in 2000, it appears that all thetransaction values are checked using a central database of identical/similar goods. The authorities
state that, in practice, Customs compares declarations to those for similar goods previously cleared
and when the difference is large, may query the importer.
(d)

Bonded warehouse facility

13.
Zambia authorizes the use of bonded warehouses and permits the Removal of Goods in Bond
(RIB). RIB allows goods to enter Zambia and remain in the country for 30 days without the paymentof taxes; if goods remain beyond 30 days, taxes are to be paid, or the goods are to be assigned to abonded warehouse. Goods may remain in the bonded warehouse for up to one year. However, thebonded warehouse facility appears to have been abused, with bonded goods leaking into the domestic
market.6(ii)

Tariffs

14.
The customs tariff generated revenue of around 2.6% of GDP between 1996 and 2001, fallingto 2.2% in 2002, and around 2.1% between 2003 and 2005. Tariffs are changed on a financial-yearbasis as part of budgetary deliberations; an Act of Parliament is the final authority for tariff
amendments. The First Schedule to the Customs and Excise Act specifies the structure of Zambia’s
customs tariff, and establishes four duty rates, 0%, 5%, 15% and 25%. Zambia’s applied import duty
rates range from 0% to 5% for raw materials, 15% for intermediate goods, and 25% for final or
consumption goods. Goods imports from COMESA partners are duty free on a reciprocal basis.

6

RIB seems to facilitate a virtual re-exporting of the goods with false stamps from Customs officers
proving that the goods made an exit out of Zambia when in reality they have not. Confronted with the loss ofrevenues due to the evasion of tax collection ZRA tends to restrict the permission for RIBs to certain companies
with good repute and proper financial standing. It also has classified seven categories of products which could
by stored in bonded warehouses, like some raw materials, spare parts and capital equipment. Perishable products
are no longer be allowed to be stored under bond. See World Bank (2004), p. 39.

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Trade Policy Review

15.
The 2008 tariff is based on HS07 nomenclature and consists of 5,962 lines at the HS eightdigit level. With the exception of 131 lines bearing alternate tariffs, all other lines have ad valorem
tariffs. Products subject to alternate duties, for which AVEs are not available, include butter, wheat
flour, clear beer, cotton (45 lines), and motor vehicles. No items are subject to seasonal, specific,
compound, variable or interim tariffs.
(a)Applied MFN tariff

16.
Zambia's tariff structure has remained broadly unchanged since its previous review. The
tariff still consists of four rates as indicated above. A number of goods may be imported into Zambia
duty free, including medicines, pharmaceuticals, veterinary, and medical equipment, chemicals inbulk, fertilizers, and seeds; also, duty on productive machinery for agriculture and mining is at 0%.
The 2008 simple average applied MFN tariff was 13.4%, the same as in 2002 (Table III.1 andChart III.1).
Table III.1
Tariff structure in Zambia, 2002 and 2008
(Per cent)
2002

2008

Final bound1.

Bound tariff lines (% of all tariff lines)

16.3

16.6

16.6

2.

Simple average applied rate

13.4

13.4

105.7

Agricultural products (HS01-24)

19.6

20.1

122.8

Industrial products (HS25-97)

12.5

12.3

62.8

WTO agricultural products

18.5

19.1

123.0

WTO non-agricultural products

12.7

12.5

41.8

18.3

18.1

40.0

18.5

19.1

120.3

Textiles and clothing
ISIC 1 - Agriculture, hunting, fishing
ISIC 2 – Mining

8.0

8.0

n.a.

ISIC 3 – Manufacturing

13.2

13.1

100.4

12.5

12.3

61.0

15.3

15.8

118.8

Manufacturing excluding food processing
First stage of processing
Semi-processed products

8.8

9.0

93.5

Fully processed products

16.5

16.1

98.5

b

a

3.

Domestic tariff peaks (% of all tariff lines)

0.0

0.0

0.0

4.

International tariff peaks (% of all tariff lines)

31.0

31.4

100.0

5.

Overall standard deviation of tariff rates

9.5

9.6

35.5

6.

Coefficient of variation of tariff rates

0.7

0.7

0.3

7.

Duty-free tariff lines (% of all tariff lines)

20.9

22.1

0.0

8.

Non-ad valorem tariffs (% of all tariff lines)

1.3

2.2

0.0

9.

Non-ad valorem tariffs with no AVEs (% of all tariff lines)

1.3

2.2

0.0

10.

Nuisance applied rates (% of all tariff lines)

0.0

0.0

0.0

n.a.

Not applicable.

aBased on 2008 tariff schedule in HS07 nomenclature. Calculations are based on 987 bound tariff lines (representing 16.6% of
total lines); 100% are bound under the WTO definition of agriculture, only 4.1% under WTO non-agriculture.
Implementation of the U.R. was reached in 1995.
Domestic tariff peaks are defined as those exceeding three times the overall simple average applied rate.
International tariff peaks are defined as those exceeding 15%.
Nuisance rates are those greater than zero, but less than or equal to 2%.

b
c
d
Note:

c

d

The ad valorem part of alternate rates were taken into account for the calculations.
The 2002 tariff schedule is based on 8-digit HS96 nomenclature and consists of 6,041 tariff lines.
The 2008 tariff schedule is based on 8-digit HS07 nomenclature and consists of 5,963 tariff lines.

Source: WTO Secretariat calculations, based on data provided by the Zambian authorities.

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Chart III.1
Average applied MF tariff rates, by HS section, 2002 and 2008
Per cent
25.0
MF 2002

Average applied rate
2002 and 2008
(13.4%)MF 2008

20.0

15.0

10.0

5.0

0.0
01
01
02
03
04
05
06

ote:

02

03

04

Live animals & products
Vegetable products
Fats & oils
Prepared food, etc.
Mineral products
Chemicals & products

05

06
07
08
09
10
11
12

07

08

09

Plastic & rubber
Hides & skins
Wood & articles
Pulp, paper, etc.
Textiles & articles
Footwear, headgear

10

11
13
14
15
16
17
18

12

13

14

15

Articles of stones
Precious stones, etc.
Base metals and products
MachineryTransport equipment
Precision instrument

16

17

18

19

20

21

19 Arms & ammunition
20 Miscellaneous manuf.
21 Works of art, etc.

Calculations include the ad valorem part of alternate rates. 2002 averages are based on HS96 nomenclature and 2008 on HS07.

Source : WTO Secretariat calculations, based on data provided by the authorities of Zambia.

17.
The coefficient of variation of 0.7 indicates continued modest dispersion of tariff rates fromone category of products to another. The most common rate of 15% applies to some 32% of tariff
lines. Close to two thirds of all lines bear a tariff rate of either 15% or 25%, while around 22% oftariff lines (1,319 lines) are duty free (Chart III.2). Virtually all raw materials and most industrial or
productive machinery fall within the 0% to 5% tariff categories, and nearly 70% of mining andquarrying-related tariff lines attract the 5% tariff rate. In 2006, the authorities reduced a number oftariffs, including on computer parts (from 15% to zero), and inputs used in textile and clothing
manufacturing.
18.
Agriculture (including hunting, forestry, and fishing) remains the most protected sector,
followed by manufacturing with applied average MFN tariff rates of 19.1% and 13.1%, respectively.
The 25% tariff rate applies to a relatively high number of agricultural products. The average applied
MFN tariff in the mining and quarrying sector is 8.0%. When the WTO definition is used, agriculture
is still the most tariff-protected sector (19.1% on average). Applied MFN tariffs on WTO defined
non-agricultural products, including petroleum, average 12.5%.
19.
In aggregate, Zambia's tariff structure shows negative escalation from first-stage processed
products to semi-finished goods, and positive escalation to finished products (Table III.1). Positive
escalation is present notably on: basic metal industries, with average applied MFN tariff rates ranging
from 5% on first stage processed products to 6.4% on semi-processed products; and paper, paper
products, printing and publishing, with average rates rising from 5.0% on first-stage processed
products, to 9.4% on semi-processed products, and 16.8% on fully processed products (Chart III.3).

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Trade Policy Review

Chart III.2
Distribution of MF tariff rates, 2002 and 2008
umber of tariff lines

2,400
MF 2008

MF 2002(33.0%).

2,000(31.9%)(31.0%)(31.4%)

1,600(20.9%)(22.1%)

1,200(15.1%)(14.5%)

800
400
0Duty free

5%

15%

25%

Tariff rates

ote:

Figures in parentheses indicate the share of total lines. Calculations include the ad valorem part of alternate rates.

Source : WTO Secretariat calculations, based on data provided by the authorities of Zambia.

Chart III.3
Tariff escalation by 2-digit ISIC industry, 2008
Per cent
30
First stage of processing

Semi-processed

Fully processed

25
Average applied rate in manufacturing(13.1.%)

20

15

10

0
Food,
beverages andtobaccoTextiles andleather

Wood andfurniture

Paper printing
and publishing

Chemicals

Non-metallic
mineralproducts

Basic metalsn.a.

ot applicable.

ote:Calculations include the ad valorem part of alternate rates.

Source :WTO Secretariat calculations, based on data provided by the authorities of Zambia.

n.a.

n.a.

5

Other
Fabricatedmetal products manufacturingand machineryZambia(b)

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Bound MFN tariff

20.
Zambia has bound customs duties on 16.6% of all tariff lines, almost unchanged from thesituation in 2002. The large gap between the average applied rate of 13.4% and the bound rate of
105.7% and the absence of bindings for over 83% of tariff lines, create a degree of unpredictability
for traders in the sense that there is scope for the authorities to raise tariffs. However, the authorities
have stated that applied tariffs have not been increased during the review period. In agriculture (WTO
definition), all tariffs are bound, almost entirely at the ceiling rate of 123%, with a few exceptions,such as wheat, rye, barley, and oats (45%); cocoa beans, cocoa paste, cocoa butter, fat and oil, andchocolate and other food preparations containing cocoa (50%); and cocoa powder, not containing
added sugar or other sweetening matter (60%). Tariffs were bound for non-agricultural products, atthe simple average rate of 41.8%. Although tariff bindings are always desirable, their practicalsignificance in Zambia in constraining future tariff increases is undermined, as bound rates
substantially exceed applied tariff levels. Zambia has so far made no commitments to reduce theseceiling bindings.
(c)Tariff preferences

21.
Exceptions to MFN tariff treatment include preferential access for members of regional
trading arrangements in which Zambia participates: all goods are freely traded between Zambia and
COMESA members that have met their free-trade area (FTA) commitments. Tariff preferences areaccorded by Zambia to the other COMESA members on a reciprocal basis. By the end of 2006, 13 of
the 20 members, including Zambia, had removed all barriers to trade between themselves, granted
trade preferences to the COMESA members that are not part of the FTA and retained tariffs onimports from outside COMESA. COMESA has now reached an agreement on common externaltariffs, although some issues with the classification of products as raw materials or processed products
remain.
22.
Effective 30 April 2001, Zambia began to implement its commitments under the SADC Trade
Protocol and to grant duty-free access, on a reciprocal basis, to imports from SADC members.
Zambia is on target to meet its obligations under the SADC free-trade area, so that 85% of goods fromthe region enter duty free; tariffs on the remaining sensitive goods will be phased out by 2012.
(d)

Tariff exemptions

23.
According to the IMF, the total value of imports exempted from customs duties (as well as
VAT, excise duties, the fuel levy, and motor vehicle licences) fell from 35% in 2004 to 21% in 2005
and 13% in the first nine months of 2006.7 The most important exemptions are granted to the mining
sector on the basis that mining output is exported. The other main exemptions (new residents' effects,
goods for diplomatic personnel, and goods for approved organizations) are standard exemptions
granted by a number of countries. Exemptions on customs duties are more costly, in terms of revenue
forgone, than those on VAT or excises, accounting for 1.9% and 0.8% of GDP in 2004 and 2005
respectively.
24.
The 2006 ZDA Act introduced special tariff exemptions for designated priority sectors,
mostly in the manufacturing sector, including 0% duty rate on all machinery and equipment for
5 years for enterprises under the ZDA. A number of import duty exemptions provided for in thecontext of the 2006 Budget are still in force: (a) for five years on all machinery, fixtures andequipment, tools, motor vehicle parts, motor cycles and bicycle parts used in the assembly of motor
vehicles, motor cycles, and bicycles; (b) for five years on inputs used in the textile and clothing
7

IMF (2007a), p. 33.

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Trade Policy Review

industry, such as grey fabrics, machinery, sewing threads, sewing machine spares, and trimmings;(c) for five years of material used in the manufacture and packaging of cement, and manufacture ofroofing sheets; (d) for five years on machinery and equipment acquired by enterprises that will
operate in the proposed MFEZ/priority sector or rural enterprises; (e) for computer parts; and (f) on
printed paper board used for packaging UHT milk.
(iii)

Other charges affecting imports

25.
Excise and VAT on imports are collected at the border; the same tax rates levied on imported
and domestically produced goods.
26.
The 2007 Budget introduced a refundable 3% advance tax on commercial imports (enteredinto effect on 1 April 2007 and was recently increased to 6%), excluding goods imported for personaluse. The measure is intended to broaden the tax base by capturing unregistered businesses who makecommercial imports. This is not an impediment to tax-paying companies on condition that the tax isfully credited/refunded promptly, although this may not be the case for companies enjoying tax
holidays. The authorities have noted that tax-complying companies include the advance income tax intheir returns so that it is reflected as an amount already paid.
(iv)

Rules of origin

27.
Zambia has both preferential and non-preferential rules of origin. Preferential rules of origin
apply under regional trade arrangements to which Zambia is a signatory. While COMESA provides
for four alternative criteria for determining origin, SADC rules of origin are negotiated, in manycases, on a product-by-product basis, making them complex and varied across products. In all cases,
an appropriate certificate of origin, issued by the exporting country must accompany eligible imports.
For countries covered by more than one agreement, an importer has a choice of arrangement underwhich to import the goods.
28.
Under the non-preferential rules of origin specified in Section 73 of the Customs and Excise
Act (Chapter 322 of the Laws of Zambia), manufactured goods are considered as originating from
Zambia if at least 50% of the material is local or value addition is a minimum of 50% of the total costof production.
(v)

Import prohibitions, restrictions, and licensing

29.
The importation of the following is expressly prohibited: false and counterfeit coins or banknotes; indecent, obscene, or objectionable material; goods manufactured or produced wholly or inpart by prison labour; pirated and counterfeit goods; and any goods prohibited under any other law inZambia, such as the Drug and Psychotropic Act, the Wildlife Act, and the National Heritage Act for
Historical Artefacts. Ivory imports are also banned.
30.
No import licences are required for general importation into Zambia.8 However, certain
agricultural goods require an import permit and a sanitary and phytosanitary (SPS) certificate prior tothe order being confirmed with the exporter. SPS certificates must be obtained in advance andincluded in the shipment documentation; when the consignment arrives at the port of entry, thecertificate is examined by the plant inspector at the border. The inspector may test samples before
allowing the products to be released. Also, certification must be obtained for imports of meat andpoultry (Veterinary Department); plants, plant parts, plant products, and regulated articles (Makulu
8

In 2004, Zambia notified the WTO that it does not have import licensing procedures and has no
regulations to that effect (document G/LIC/N1/ZMB/2, 18 February 2004).

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Research Station); food and drugs (Ministry of Health); firearms and ammunition (Zambia Police).
Standard customs declarations are required for imports.
(vi)

Contingency measures

31.
In November 2004, the Customs and Excise Act and the Import Control Acts were amended
to allow for safeguard measures to be applied. The amendments were drafted with the objective ofensuring compatibility with the WTO, COMESA, and SADC agreements, and to address the concernsof the private sector, which has been particularly concerned about unfair competition and cases of
predatory pricing. Under COMESA there is provision for measures in the form of anti-dumping
duties, countervailing duties or QRs sufficient to reduce the flow of imports (to not below the last
3-year average). Under the SADC protocol, members may apply anti-dumping measures that are inconformity with WTO provisions, or countervailing duties consistent with WTO provisions, to offset
the effects of subsidies.9
32.
Under the Customs and Excise Regulations, any person whose interests may be harmed byimported goods that are being sold at rates below that of the country of production may make acomplaint to the Controller of Customs. Upon review, if it is established that goods are being dumpedin Zambia, an anti-dumping duty is levied. No safeguard measures have been applied since 2004.
(vii)

Government procurement

33.
Government procurement is governed by the Public Procurement Act No. 12 of 2008 andassociated tender regulations. The Act is applicable to all public institutions, including government
ministries and departments, parastatal and statutory bodies, and local councils. The Zambia National
Tender Board Act of 1982 (chapter 394 of the Laws of Zambia) and associated Tender regulations
were in force until repealed by the new Act. Zambia is not a member of the WTO procurement Code.
34.
The District Tender Committees are authorized to make simplified bidding (informal tenders)for goods, services and works of up to K500 million. All government purchases exceeding
K30 billion for goods, services and works and K10 billion for consulting services, including capital
expenditures from external assistance, go through the Zambia Public Procurement Authority. Manylarge projects are funded by multilateral lending institutions and bilateral donors, in which case theirprocurement regulations are followed.10
35.
Requests for bids are published in the Zambian Government Gazette and local English
language daily newspapers. An eight-week period, from the first announcement in the Gazette, isallowed for international competitive bidding. Bids must be submitted in accordance with the
instructions to bidders. Tenders are opened in public and price information is disclosed. The legal
framework provides for local preferences, where applicable, of 15% for locally manufactured goods
with at least 40% value-added content; 20% for goods produced in Zambian small businesses; 7.5%
for local contractors; and 5% for imported goods held in stock by local merchants.
36.
The Public Procurement Act does not have a threshold for international tenders as theauthorities believed until recently that they could obtain all necessary goods and services primarily
from Zambian suppliers. Decisions (by the Controlling Officers) to invite offers from local orinternational suppliers are based on whether the required goods and services could be obtained inZambia. Mainly due to international agreements such as the EPAs with the EC and the COMESA
9

Dun and Bradstreet (2006).
According to the authorities, the value of government procurement averaged K 125 billion perannum from 2005 to 2007, equivalent to about 0.3% of GDP; an estimated 15% was through foreign suppliers.
10

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Trade Policy Review

Directive on procurement (which plans to harmonize public procurement systems among members
states), the Government has begun to review its policy on procurement in terms of integratinginternational and regional procurement thresholds.
(viii)

Import-related operations of state-trading enterprises

37.
In 2007, Zambia notified the WTO that is does not maintain any state trading enterprises inaccordance with the definition in GATT Article XVII.11(ix)

Standards and other technical requirements

38.
A key activity for enhancing trade facilitation is the strengthening of the standardization,
certification, and inspection units of the Zambia Bureau of Standards so that they can provide more
efficient services for importing and exporting, thus ensuring conformity with international andregional standards and technical requirements.12 It seems that Zambia does not have the capacity toproperly test all imported products (for example, there is only minimal testing on electrical products),
which provides considerable scope for exporters to find a market for substandard products in Zambia.
39.
The 2005 Diagnostic Trade Integration Study13 highlighted a number of problems in Zambia's
standards infrastructure. While the Zambia Bureau of Standards (ZABS) is the main Government
body responsible for setting, reviewing, monitoring, and implementing technical standards for allindustries including agriculture, the Food and Drugs Control Laboratory and the Ministry ofAgriculture also set standards, and they are not required to notify the ZABS. The ZBS maintains acomprehensive database of existing standards scattered across a wide range of legal instruments. The
ZABS was established in 1982 by Act No 22, which was later repealed and replaced in 1994 by theStandards Act 416.
40.
Zambian standards are to a considerable extent based on international standards developed byinternational standards-setting bodies such as the International Standards Organization (ISO), and theCodex Alimentarius Commission. Zambia is an affiliate member of the International ElectroTechnical Commission (IEC), and has been a corresponding member of the ISO since 2003 and isplanning to upgrade this to full membership. Currently, there are around 640 Zambian standards(42 adopted from ISO, 84 from the IEC, 140 from COMESA, and 34 SADC standards). They coverbuilding and construction, food and agriculture, textiles, and chemicals. ZABS is the selling agent inZambia for foreign and international standards, such as the International Organization forStandardization (ISO) and national standards of many countries in the world. ZABS is an observer
member of ISO, ARSO and IEC.
41.
ZABS formulates various standards and implements them through a product certification
marking scheme: a manufacturer of a product that meets a Zambian standard may apply to use the
Bureau's certification mark under a scheme of supervision that includes inspection and testing of themarked product. Participation in the certification scheme is also open to manufacturers outside ofZambia.

11

G/STR/N/11/ZMB of 13 September 2007.
According to the 2007 progress report of the Fifth National Development Plan, equipment was
procured and training provided to enhance the operations of the Zambia Bureau of Standards and the Zambia
Weights and Measures Agency. See Ministry of Finance and National Planning (2008), p. 63.
13
World Bank (2005b), pp. 33-36.
12

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42.
ZABS also operates a small metrology laboratory (the Zambia Bureau of Standards
Metrology Laboratory), which offers calibration services in the fields of mass, length, and pressure.
The range of tests is limited by availability of standards and testing equipment.
43.
Zambia notified the WTO in 1998 with respect to the adoption of the Code of Good Practiceand the creation of a WTO/TBT Enquiry Point under the ZABS. The Enquiry Point has not been
active because it lacks financial and basic technical resources. In 2004, the ZABS notified the WTO
of its acceptance of the TBT Code of Good Practice.14 Zambia also continues to participate inregional programmes aimed at harmonizing standards and conformity assessment schemes such as
those under COMESA and SADC(x)

SPS measures

44.
The Ministry of Agriculture and Cooperatives (MAC) is responsible for control andmonitoring of animal and plant health in the production, distribution, and supply of raw materials to
the food-processing sector. The Ministry of Health deals with other issues relating to food safety andlabelling, and administers the Food and Drug Act. Zambia notified the WTO in 2008 that it had madestrides in the formation and establishment of a dedicated office for the Enquiry Point15, in line with
WTO transparency requirements.
(a)Animal health

45.
The Department of the Veterinary and Livestock Development, in the MAC, is the main
service responsible for the control of animal diseases and the safety of livestock products. It
promulgates policies and regulations on animal diseases, develops veterinary inspection procedures,and is responsible for inspection and certification of imports and exports of animal products. The
Department has five regional veterinary laboratories that conduct tests on diseases, and cooperates
with the National Livestock Epidemiology and Information Centre, which gathers and processes dataon animal health and disease status and control. Zambia is a net importer of animal products. Exports
are mostly confined to day-old chicks and to semi-processed hides and skins.
(b)

Plant health46.
The Zambia Agriculture Research Institute is the responsible authority (under the MAC) for
implementing, monitoring, and controlling plant health policies and issues.
It has four
divisions/branches among which is the Plant Quarantine and Phytosanitary Service (PQPS). Based on
the Noxious Weeds Act and the Plant Pests and Diseases Act (Cap.231), the PQPS is responsible forcarrying out the functions specified in the International Plant Protection Convention16 (IPPC), and foroverseeing the agricultural plant safeguarding system, including surveillance, inspection, issuing
phytosanitary certificates for exports, and conducting pest risk analysis.
47.
With the help of the FAO, the Government has prepared a new Plant Protection Bill, which iscurrently undergoing public review and comments and is expected to replace Cap 231. The main
aims of the new Act are, inter alia: to prevent the introduction, and to control the spread, of plant14
On 4 November 2004, the ZABS notified acceptance of the WTO TBT Code of Good Practice forthe preparation, adoption and appreciation of standards.
15
The WTO Enquiry Point was set up with support from the JITAP project and the Zambia Threshold
Project, funded by USAID. See WTO document G/SPS/GEN/836 of 27 March 2008, Information on various
SPS matters.
16
Identified in the SPS Agreement as an organization that provides international standards for
phytosanitary measures implemented by governments to protect their plant resources from harmful pests.

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Trade Policy Review

pests; to provide for the protection of plant resources; and to regulate trade in plants and plant
products. The proposed new Act is a substantial improvement on the existing legislation as it would
bring Zambia into line with its IPPC obligations.
(c)Needs assessment

48.
In March 2006, following a request from the MAC, the World Bank conducted a sanitary andphytosanitary (SPS) needs assessment in Zambia.17 The objectives were to identify where SPS andstandards issues were constraining trade and recommend areas where further in-depth work was
required.18 These were: the functions and performance of Plant Quarantine and PhytosanitaryServices (PQPS); food safety standards in agro-processing factories and restaurants/hotels; thecurrent state of laboratories supporting the agriculture and food sectors and the plans for future
investment; and, the demand for establishing a certification system for good agricultural practices forfarmers supplying the high-end of the local horticultural market. The report concludes that Zambia’s
trade faces relatively few plant health constraints.
49.
The report noted inter alia that Zambia exports very little food (other than sugar) and is alarge net importer of food. Its processed food exports are directed at neighbouring countries whereprevailing official and private standards are similar to those in Zambia. Zambia’s food trade with
developed countries is small and declining, consisting of a limited vegetable sales to the United
Kingdom, Holland, Australia, and South Africa, and sales of honey and paprika to a few countries.
(3)

MEASURES DIRECTLY AFFECTIG EXPORTS(i)

Procedures and documentation

50.
Exporters must complete form CE 20, declaring goods to be exported, this is submitted tocustoms electronically either through Necor (contracted by ZRA to impute trade data on behalf oftraders) or directly online if the exporter is linked to Customs' ASYCUDA system. A hard copy ofform CE 20 is also submitted, together with commercial invoices, the bill of lading, road manifest,
and any other commercial documents that will accompany the goods. Where relevant, the appropriate
certificate of origin must also be submitted. Customs examines the declaration against the physicalexport, stamps the documents, and releases the goods; according to the authorities, this process canbe completed within one hour. The ZRA carries out inspections on exports as a check against thesmuggling of proscribed goods, and to obtain information for VAT refunds and duty drawbacks. 19(ii)

Export taxes

51.
The 2008 Budget encouraged local value addition by introducing an export levy of 15% on
the export of copper concentrates and cotton seed (subsequently raised in the 2009 Budget to 20% for

17World Bank (2006).
The mission concluded that there were only a few significant SPS and standards issues constraining
trade. However, it identified areas where trade might be constrained in the future and recommended that theseshould be evaluated further: subsequently, a larger mission was organized.
19
Inspections are carried out by the ZRA to ensure that the content of the Export Declaration Form
EXD is a correct representation of items being exported and to guard against smuggling of prescribed goods,
e.g. drugs and those that require permits. In other cases, the foreign importer may request an inspection. Timetaken for inspection depends on the availability of staff, the packaging, and the nature of goods, but generally
takes a day, according to the Customs and Excise Department if the consignment is not complex.
18

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cotton seed), in recognition of the availability of local capacity to process these products.20 An export
tax also exists on scrap metal, which is considered an important input for manufacturing.
(iii)

Export prohibitions, restrictions and licensing

52.
Export prohibitions apply to certain types of logs under international agreements, andoccasionally for grains (during drought years). There are no general export licensing requirements(except for prescribed goods) although certain goods, such as fertilizers, live animals, gemstones, andfirearms, require special export permits.
(iv)

Duty and tax relief

53.
In addition to tariff exemptions, a duty drawback scheme and a temporary admissions system(manufacturing under bond) are meant to provide exporters with relief on import duty paid. In 2002,
the Government passed the Export Processing Zones (EPZ) Act to provide incentives for investors inexport processing zones. However, implementation of the EPZ Act was suspended in 2004 becauseof concern about its impact on revenue, and the authorities have now abandoned efforts to establish
export processing zones. Instead, they are focusing on multi-facility economic zones (MFEZs), which
offer a wider set of incentives to exporting and non-exporting enterprises.
(v)

Export promotion and finance54.
The Export Promotion and Market Development Division (EPMD) of the ZDA is responsible
for promoting the non-traditional sector, which comprises products and services other thanunprocessed copper and cobalt and tourism. The EPMD assists exporters, inter alia, by facilitating
technical and financial assistance for export development, providing market intelligence, andorganizing participation in trade fairs and trade missions.
55.
EPMD provides financial support to the non-traditional export sector through low interest
loans under the Zambia Export Development Fund (ZEDEF), an EU-financed export development
loan fund. Its objective is to assist in the expansion of Zambian non-traditional exports. The fundsucceeded an EU-funded scheme that ran from 2003 to end 2007. According to the authorities, thefund will eventually total in excess of US$5 million.21 Beneficiaries currently include horticulture,
floriculture, wood, leather, organic products, and crocodile industries.
56.
A second EU-funded export development scheme, which covered the period 2002 to 2008
was the Mining Sector Development Programme (MSDP), a €30 million fund intended to provide
adequate capital and equipment for mining, downstream processing, and marketing in the
non-traditional small-scale gemstone mining sector. The MSDP had its own project office affiliatedto the Ministry of Finance and National Planning and the Ministry of Mines and Minerals
Development. Loans were administered by local banks under their own commercial lending
conditions. Support was also given for the preparation of bankable documents for loan applications,and technical assistance and business assistance, including technical advisory services to the nontraditional mining sector in: mining techniques, geology, gemstone evaluation, export promotion andmarketing, business entrepreneurship, mineral processing and appropriate technology, environmental
and safety management, and funding access support (linkages, business proposal appraisals). Some of20

An export levy generally has the effect of reducing the domestic price below what otherwise would
be the case.
21
The loans are disbursed in U.S. dollars for 12- to 24-month periods at the London Inter-bank
Borrowing Rate (Libor) + 2%. Borrowers are required to contribute 25% of the project finance and collateral ofa value of 50% of the loan amount.

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Trade Policy Review

the key achievements of the programme include the establishment of a gemstone processing centre
and an iron ore processing project.
(4)

MEASURES AFFECTIG PRODUCTIO AD TRADE(i)

Framework for registration and licensing of a business

57.
The main laws defining the framework for registration and licensing of businesses are: theCompanies Act (chapter 388), the Registration of Business Names Act (chapter 389), the Trade
Licensing Act (chapter 393), and the Zambia Development Agency (ZDA) Act (which replaced theInvestment Act).
58.
The Zambian Government has been engaged in a comprehensive reform of the businesslicensing regime, having recognized that many licensing requirements and practices present asignificant burden to enterprise growth, wealth, and job creation. In certain sectors, such as tourism,
the large number of licences that may be required, the time and the number of different authorities
involved, and their discretion in the decision-making process, could be significant impediments toforeign investors.22 Licensing reform forms a core part of the PSD programme in order tosubstantially reduce the number of licensing requirements, make the regime simpler, transparent, andfocused on legitimate regulatory purposes, as well as to substantially reduce compliance costs. The
Business Licensing Reform Committee, mandated to make recommendations on which licences
should be eliminated, streamlined, or reclassified, is expected to complete its work in 2009.
59.
According to the World Bank23, the procedures required in order to register a businessinclude: checking the name for uniqueness at PACRO; registering the company at PACRO;
registering with the local ZRA office, direct tax division to obtain a corporate tax number; filing a
VAT registration form with ZRA to obtain a VAT tax number; and registering with National Pension
Scheme Authority for Social Security.
60.
The U.S. Millennium Challenge Account (MCA) has provided funding to establish a limited
network of provincial offices (removing the need for investors outside Lusaka to make the journey tothe capital), thus decentralizing company registration. Furthermore, MCA assistance has facilitatedthe establishment of the ZDA as a one-stop facility for investors and business people and encouraged
simplification of the economic regulatory framework.
61.
The World Bank notes that Zambia has simplified business registration in recent years. It
reorganized the one-stop shop through process reengineering and computerization and improved theoperation of the Zambia Revenue Authority by creating a customer service centre. Similar
improvements at the Land Registry office cut the time to register property by almost half.
Amendments were made to the Income Tax Act and Value Added Tax Act to update, strengthen, andremove ambiguities in these laws and enhance the effectiveness of tax administration. In addition, thewithholding tax on savings and deposit accounts was reduced from 25% to 15%. Overall, Zambia's
Doing Business rank for 2009 was 100th (out of 181 countries), up from 116th in 2006. It has
performed particularly well in the area of starting a business, ranking 71st; the number of procedures
required is (6) considerably less than the regional average.

22

A 2004 World Bank-FIAS report identified a number of shortcomings in the procedures to establish
a business, mainly due to lengthy licensing procedures (Foreign Investment Advisory Service, 2004).
23
World Bank (2008a), p. 52.

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Taxation(a)Overview of tax system

62.
The Income Tax Act, the Customs and Excise Act and the Value Added Tax Act are thebasic laws that cover Zambia’s tax system.
Indirect taxes
63.
Zambia imposes excise taxes on a traditional range of goods, including soft drinks, alcoholic
beverages, tobacco products, and petroleum products. In an effort to improve revenue, recent budgets
have extended excises to motor vehicles, talk-time on cell phones, and, in 2006, an additional carbon
tax was levied on motor vehicles. The only unusual excise tax in Zambia is an electricity, which
typically is not subject to excise as it is a basic commodity but is considered an earmarked levy forrural electrification. Most excises are ad valorem and range from 10% for soft drinks to 125% forwine. The base for excises on imported goods is the c.i.f. value plus the import duty.
64.
In addition, a value-added tax (VAT) of 16% (reduced from 17.5% on 1 April 2008) ispayable on all imports and on locally produced goods and is levied on the duty-paid value of thegoods. VAT is imposed on goods and services provided by suppliers with a turnover of over
K 200 million (about US$55,000) per year.24 Exemptions include agricultural products, healthservices, books, and educational services; a zero rate is applied on exports, medical supplies, anddrugs, and supplies affecting the tourism industry. VAT is charged on imported goods based on the
taxable value, which is the value for duty purposes plus the customs duty and excise tax if applicable.
Direct taxes
65.
The general corporate tax rate is 35%. However, there have been a number of long-standing
preferential rates and generous allowances for sectors the Government has wished to promote. For
example, the agriculture sector enjoys a rate of 15% and successor mining companies to ZCCM have
paid a concessionary rate of 25%. Companies listed on the Lusaka Stock Exchange pay 33%, topromote financial deepening, in their first year of listing. Commercial banks are taxed at 40% of theirprofits above K250 million (about US$83,500). Sectors that do not benefit from special incentive
schemes remain heavily taxed compared with countries in the region. The ZRA has embarked on amodernization project to strengthen the effectiveness of tax administration (Table AIII.1).25(b)

Zambia Development Agency (ZDA) Act

66.
Until 2006, investment tax incentives were provided under the Investment Act (1993), as
amended in April 1996, and the Small Enterprise Development Act (1996). The Investment Act,
which had abolished special incentives such as exemptions from indirect taxes, was replaced by the
ZDA Act in 2006. This brought in a new set of incentives applicable only to investments over
US$500,000, licensed by the Zambia Development Agency, and operating within a sector designatedas a priority by the Minister of Commerce, Trade and Industry. The priority sectors include:
floriculture; production and processing of cotton, and garments; manufacturing of engineering

24

The sales level for VAT registration seems high and could discourage even medium-sized firms fromentering the formal sector.
25
IMF (2008), p. 6, May.

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Trade Policy Review

products; and production and processing of raw timber. The list of sectors may be amended bystatutory instrument.26
67.
Investment incentives based on tax holidays were reintroduced in early 2007 for companies
operating in multi-facility economic zones and a long list of priority sectors. While additional
investment is needed, international experience demonstrates that investors give lower priority to tax
incentives than to a competitive investment climate characterized by sound economic policies andinstitutions; political and economic stability; quality infrastructure; a productive workforce; a secureand stable business environment; an efficient and responsive government administration; as well astransparent tax rules and administration.27 A recent IMF study on the effective tax burden in Zambia
did not recommend additional tax incentives, and urged the Government to take stock of all tax
incentives and begin reporting them in the budget documents, with a view to quantifying the cost andstreamlining them to broaden the revenue base.28(c)Multi-facility economic zones

68.
The ZDA Act also introduced multi-facility economic zones (MFEZs), under whichdevelopers, operators, and tenants benefit from a number of fiscal and non-fiscal allowances. The
authorities have abandoned efforts to establish export processing zones (EPZs), and are focusing on
MFEZs which offer a wider set of incentives to exporting and non-exporting enterprises. Currently,
the two MFEZ sites are in Lusaka and Chambishi on the Copperbelt (under construction). Incentives
within the MFEZ are available to both Zambian and foreign firms to promote manufacturing, exports,
technological development, skills transfer, and job creation. Incentives are also available to priority
sectors operating outside MFEZs.
69.
Investment must be at least US$500,000 in a priority sector to qualify companies investing
less than that amount in the MFEZ will benefit from the infrastructure provided in the zones.
Incentives available to companies include: (i) 0% tax on dividends declared, for five years from theyear of first declaration of dividends. Generally, the payment of dividends by Zambian resident
companies is subject to deduction of withholding tax at 15%; (ii) no tax on profits for five years
from the first year profits are made; (iii) for years six to eight only 50% of profits will be taxed. andfor years nine and ten only 75% of profits will be taxed; (iv) deferment of VAT on machinery andequipment, including trucks and specialized motor vehicles imported for investment; (v) suspensionof import duty to 0% on raw materials, capital goods, and machinery, including trucks.
(iii)

Other incentives

70.
According to the authorities, once a ZDA investment licence is obtained, a company has
access to fiscal and non-fiscal incentives. The non-fiscal incentives include facilitation services by the
ZDA in the acquisition of land, immigration permits, and other secondary licences that may be
26

Since 2006, two statutory instruments (SIs) have been issued: SI 27 (2007) added a number ofpriority sectors in the areas of ICT and health; and SI 6 (2008) added tourism, processing of agricultural, forest
and non-ferrous products and a range of manufacturing activities including machinery, iron and steel, electricaland electronic products, pharmaceuticals, pulp and paper, textiles, plastics, rubber products, leather, fertilizer
and cement.
27
A number of studies have come to this basic conclusion. See Howell et al. (2002). Vito Tanzi andParthasarathi Shome examined the experiences of East Asian countries including Taiwan, Korea, and Singapore.
See Tanzi and Shome (1992). For a similar conclusion for economies in transition see OECD (1995). The
Zambian authorities acknowledged that while the IMF and World Bank contend that incentives never work in
attracting investment, the majority of countries grant incentives to investors including developed countries.
28
IMF (2006).

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required. In addition, the Agency may collaborate with a foreign direct investor in identifying local
partners where relevant.
(iv)

Role of state-owned enterprises and privatization

71.
Since the early 1990s, the private sector has played a greater role in the national economy,
following a privatization programme that covered a wide range of public enterprises of differing sizes,
mainly in manufacturing and mining. Prior to the privatization programme, the State controlled over
80% of the country’s productive and service-related activities, a share that is now reduced to between
10% and 15% according to the authorities, as the bulk of the mining companies owned by thegovernment and other parastatals were privatized. To date, privatization has been concentrated inmining, manufacturing and financial services (Table III.2). The Zambia Development Agency (ZDA)
succeeded the Zambian Privatization Agency in January 2007 as the country’s privatization vehicle.
Table III.2
Government shares in public enterprises, as of September 2007
(Per cent)
Entities
Energy sector
Indeni Petroleum Products
Tazama Pipelines
Zambia Electricity Supply Corporation
Mining sector
Kagem Mining
Kariba Minerals
Maamba Collieries
Nitrogen Chemicals of Zambia
Zambia Consolidated Copper Mining Investment Holding
AHC Mining Municipal Services
Chambishi Metals
Chibuluma Mines
Copperbelt Energy Corporation
Kansanshi mining
Konkola Copper Mines
Luanshya Copper Mines
Mopani Copper Mines
Ndola Lime Company
NFC Africa Mining
Financial sector
Development Bank of Zambia
Indo-Zambia Bank Limited
National Savings and Credit Bank
Zambia National Building Society
Zambia National Commercial Bank
Zambia State Insurance Company
Other sectors
Contract Haulage
Engineering Services Corporation
Medical stores
MOFED (London)
MOFED (Tanzania)
Mpongwe Development
Mpulungu Harbour Corporation
Mupepetwe Engineering

September 2007

50
60
100
20
51
100
100
87.6
100
10
15
20
20
20.6
15
10
100
15
67
50
100
100
51
100
100
100
100
100
100
0.05
100
100
Table III.2 (cont'd)

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Entities

Trade Policy Review

September 2007

National Airports Corporation
National Housing Authority
Nganga Farms
Tanzania-Zambia Railways
Times of Zambia
Zambia China Mulungushi Textiles of Zambia
Zambia Daily Mail
Zambia Education and Publishing House
Zambia Postal Corporation
Zambia Printing Company
Zambia Railways
Zambia State Lotteries
Zambia Telecommunication
Zamcapital Enterprises

100
100
23.8
50
100
40
100
100
100
100
100
100
100
100

Source: IMF (2008), IMF Country Report No. 08/30, Zambia - Statistical Appendix, Appendix II, p. 40, January. Viewed
at: http://www.imf.org/external/pubs/ft/scr/2008/cr0830.pdf.

72.
During the 1990s, Zambia opened its doors to foreign investment, reduced government
intervention in commercial activities, privatized over 260 enterprises, and eliminated many market
distortions. The main privatization was that of Zambia Consolidated Copper Mines in March 2000,
which effectively ended its drain on state resources and enabled necessary fresh mining investment.
The Zambia National Commercial Bank (ZANACO) was recently privatized and, according to theauthorities, the bulk of identified companies have been privatized and the remainder (20) are atvarious stages of processing and consideration.
73.
Some of the companies remaining to be sold are those whose finances are in bad condition or
those that the Government considers to be in strategic sectors, including power generation,
telecommunications, and oil refining, which remain under government monopoly control. As a result,these services are inefficient, resulting recently in an electrical power crisis that is likely to last for
years, and regularly recurring fuel shortages. The plan to privatize energy and fixed-line
telecommunication services (including Zesco and Zamtel) has stalled although the Government hasembarked on an asset evaluation of Zamtel, with the possibility of looking for a strategic partner forthe telecoms company.
(v)

Competition policy

74.
There is no competition policy per se in Zambia to enable successful enforcement ofcompetition law, which is enshrined in the Competition and Fair Trading Act 1994. This Act isenforced by the Zambia Competition Commission whose role is to prevent abuse of dominantposition, predatory behaviour, discriminatory pricing, restrictions on distribution, and collusion. The
Commission is an independent body and its decisions can be appealed against in the High Court.
According to the authorities, the Commission rarely ever raises competition concerns on a foreigncompany taking over a local company, where the foreign company has no presence in Zambia.
75.
Currently the Zambian competition law does not have any set merger notification thresholds,
meaning that all mergers must be notified to the Commission before they are effected.29 The
assessment process after notification varies depending on whether the proposed merger would raisecompetition concerns. Merger tests undertaken by the Commission are on substantial lessening ofcompetition and abuse of dominant position of market power, Sections 7(1) and 7(2) of the Act, as29Section 8 of the Competition and Fair Trading Act – the Act.

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well as international precedence. These tests are based on an assessment of whether the merger may
lead to the prevention, restriction or distortion of competition to an appreciable extent in Zambia or asubstantial part of it.
76.
During the period under review (2002-08), the Commission reviewed over 100 merger cases,
most of which were granted final unconditional authorization. About 15 mergers were granted
conditional authorization and less than 5 were rejected. Companies surveyed by UNCTAD agreed
that the Commission’s past merger authorizations have shown a good balance between competition
objectives and the need to promote FDI in Zambia.30 The Commission is of the view that competition
law cannot be effectively enforced without the support of sector regulators, such as theCommunications Authority, the Energy Regulation Board, and the National Water Supply andSanitation Council.31(vi)

Protection of intellectual property rights(a)Overview

77.
During the period under review Zambia has not amended its intellectual property legislation,
which remains essentially as described in its previous Review.32 The Patents Act, Trade Marks Act,
the Registered Designs Act, and the Copyright and Performance Rights Act provide the legal
framework for intellectual property protection. The Patent Act provides patent protection for a periodof 16 years, with the possibility of renewal; the Copyright and Performance Rights Act and theRegistered Designs Act provide protection for 50 years (copyright) and 5 years (registered designs);
the Trade Marks Act provides exclusive protection, initially for seven years, renewable in 14-year
blocks thereafter.
78.
However, there are plans to review legislation now that a new National Intellectual Property
Policy is nearing completion.33 The amended IP legislation will include protection for utility models,
geographical indications, and appellations of origin and will include amendments to the Patents Act
extending protection to 20 years (in line with the TRIPS Agreement). The Trademarks Act will
include protection of service marks, which are not currently covered. The Copyright and Performance
Rights Act of 1994 is also under review.
79.
Zambia is a member of the World Intellectual property Organization (WIPO) and has signed
the 1883 Paris Convention on industrial property and the 1886 Bern Convention on literary andartistic works. It is also a member of the African Regional Industrial Property Organisation (ARIPO),
which was established to promote harmonization of intellectual property laws in the region. Zambia isa member of the ARIPO Protocol on Patents and Industrial Designs aimed at pooling and harmonizing
regional IP administration in the field of patents, utility models, and industrial designs. As an LDC
Member of WTO, Zambia has until 2013 to conform to TRIPs for patents, and until 2016 for30

UNCTAD (2006), p. 30.
Zambia Competition Commission (2006), p. 50.
32
WTO (2003), pp. 52-56.
33
Work on a national IP policy, led by WIPO in cooperation with the authorities, includes a needs
assessment to determine the compliance of Zambia's national legislation with international intellectual property
rules in the area of industrial property. There is currently no national legislation on geographical indications,nor on layout-designs of integrated circuits.
31

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Trade Policy Review

pharmaceutical patents.34 Plans are under way to accede to the WIPO Copyright Treaty (WCT) andthe WIPO Performance and Phonograms Treaty (WPPT).
80.
The Patents and Companies Registration Office (PACRO) deals with the registration ofpatents, trademarks and industrial designs. PACRO has offices in Lusaka, Ndola (Copperbelt
Province) and Livingstone and is decentralizing its operations. It had received substantial support
from WIPO with regard to assessment of legislative compliance, IT-infrastructure for patent registry,
and training for IP office personnel and other officials (e.g. customs and police officials, judges).
PACRO had also initiated the establishment of an ad hoc committee (comprising ministries, and theuniversity and private sectors) to discuss the development of a national IP policy.
81.
Copyright and related rights are dealt with by the Copyright Unit under the Ministry ofInformation and Broadcasting Services. The Ministry of Science, Technology and Vocational
Training is revising science and technology policy to include issues related to traditional knowledge.
(b)

Patents

82.
Patent protection is provided under the Patents Act of 1958 and the 1995 Statutory
Instrument 54. A patent is obtainable under this law through either the national procedure or the
ARIPO procedure. Many general principles provided for under the law are applicable to bothprocedures; the most notable requirements for patentability include that a process or product must be
novel, not obvious (or must involve an inventive step), be capable of application in trade or industry,
and must not be seen to promote immorality or otherwise be offensive to written laws.
83.
A primary concern for Zambia, given the proliferation of premature deaths as a resultant of
HIV and AIDS, malaria, tuberculosis, and dysentery is facilitating affordable access to essential
medicines. HIV and AIDS-related complications are the second principle cause of death in Zambia,
after malaria. The demand for more and cheaper ARVs is high.
84.
For Zambia to become compliant with the TRIPS Agreement, national legislation andregulations will need to be assessed in the light of the flexibilities inherent in the TRIPS Agreement35:
transition period accorded to LDCs, determination of patent criteria, determination of patentexclusions, content of patent applications, determination of exceptions to patentability, andapplication of compulsory licences. Article 61(A) of the Pharmaceutical Act (Act No. 14 of 2004)
gives authority to the pharmaceutical regulatory authority, in the case of declaration of a national
health disaster by the Health Minister, to authorize the manufacture of generic versions of patented
medicines notwithstanding the Patent Act or any written law.
85.
A compulsory licence is obtainable in Zambia on the grounds of insufficient use of thepatented technology by the patentee in Zambia and, therefore, failure to meet the reasonablerequirements of the public. The principal requirement for the issue of a compulsory licence is that
attempts to obtain a licence under reasonable commercial terms must have failed over a reasonable
period of time. Pharco Ltd, a pharmaceutical company in Zambia has a compulsory licence tomanufacture ARVs. The TRIPS Agreement also provides that the requirements for a compulsory
34
The TRIPS Agreement was drawn up in such a way as to allow member States the flexibility indetermining certain aspects of national intellectual property legislation. Furthermore, as a Least Developed
Country (LDC) Zambia does not have to apply all of the provisions of the TRIPS Agreement until the
1st July 2013 and the provisions of the TRIPS Agreement as they relate to pharmaceutical products until the
1st of January 2016.
35
LDCs are granted a transition period up to the 1 January 2016 with respect to TRIPS provisions as
they apply to pharmaceutical products.

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licence may be waived in certain situations, in particular cases of national emergency or extreme
urgency or in cases of public non-commercial use.
(c)

Other industrial property

86.
The trade mark system is governed by the Trade Marks Act and the Merchandise Marks Act.
While the Trade Marks Act is the only legislation that provides for the registration of trade marks andits incidental activities, it does not cover service marks. The Act regulates the registration of a trademark, rights given on registration (e.g. the onus is on the proprietor to bring any civil action for
infringement), infringement of these rights, and obligations on trade mark owners after registration. It
provides for initial protection of seven years, extendable for 14 years at each renewal on payment of arenewal fee.36 The Merchandise Marks Act regulates only the use of trade descriptions. It prohibits
use of offending trade descriptions and forged trade marks on merchandise, imported or for
manufacture or sale in Zambia.
87.
The Registered Designs Act of 1958 provides for protection of designs that are artistic. To beregistered, the design must be original and not similar to a design already registered. The application
process is relatively simple and governed under both the national procedure and the ARIPO
procedure. Following substantive examination of an application (filed using forms prescribed under
the Registered Designs Act) and approval, protection is granted for five years renewable for two
consecutive periods of five years.
(d)

Copyright

88.
Copyright is protected by the Copyright and Performance Rights Act, which covers, interalia, literary, music, sound recordings, audio-visual and artistic works, broadcasts, and computer
programs, and administered by the Office of the Registrar of Copyright, within the Ministry ofInformation and Broadcasting Services. The Copyright Act has not been amended since its enactment
in 1994. The Registrar of Copyright, a public officer appointed under the Service Commissions Act,
1991, registers and monitors the activities of collecting societies, examines cases of alleged copyright
infringement, and arbitrates between users of artistic works and artists/societies. Copyright protection
covers both economic and moral rights. The rightholder has exclusive economic right to authorize or
prohibit the use of the work. Exclusive moral right is to ensure that the work is not misrepresented.
The duration of copyright protection extends for 50 years after the author's death or, for audio-visual
work, 50 years after it was first created or first made available to the public. For computer programs,
the duration is 50 years from the date of first use, while for typographic arrangements it is 25 years
from the date of first publication.
89.
Copyright infringements are actionable in a court of law and punishable, on a first conviction,
by a fine or imprisonment for a term not exceeding five years. Right holders may also be granted
compensation by way of damages, injunctions, and confiscation of profits.
(e)Enforcement

90.
Enforcement is undertaken mainly by PACRO, the Zambia police IP unit, and the Copyright
Unit of the Ministry of Information and Broadcasting Services. The latter has formed anti-piracy
crack squads whose mandate is to fight piracy and counterfeiting. The squads comprise officers from:the Drug Enforcement Commission, which combats laundering of money from piracy and counterfeit
trade; the Office of the President which provides intelligence information to the squads; local
36

This Act was amended to incorporate provisions of the Madrid Protocol, to which Zambia becamebound from 15 November 2001.

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Trade Policy Review

councils, which prohibit the sale of illegal goods in Council-owned; the Zambia Police Service; theDepartment of Immigration to check on foreigners engaging in counterfeit and piracy; the Zambia
Revenue Authority, through border controls, where customs officers have the authority to seize
infringing products ex officio; the Zambia Bureau of Standards; and Journalists Against Piracy inZambia, a group providing information on the activities of the crack squads. In addition, PACRO
assists in enforcement through awareness programmes in the form of workshops and seminars and via
the internet, journals, and newsletter.
91.
The authorities acknowledge that the main factors that continues to inhibit enforcement
efforts include: law enforcement officers' insufficient capacity (in particular training on intellectual
property matters as the police, customs, immigration, and other officials lack the necessary knowledge
on copyright and related rights); difficulties for officers to differentiate between a genuine and pirated
product; and lack of transport for the squad to conduct its operations. The latter is a major challenge
as mobility is essential in order to curtail piracy and counterfeiting, which is mostly in border areas,according to the authorities. The authorities concede that in electronic and audio-visual media, there
have been many instances of unauthorized reproduction and distribution of tapes, videos, and DVDs,
which have occasionally been confiscated and destroyed. Enforcement-related statistics were notprovided to the Secretariat in the context of this report.