ZAMBIAAFRICA’S NEW FRONTIER FOR
INVESTMENTS AND PROFITSZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSZAMBIA
AFRICA’S NEW FRONTIER FOR
INVESTMENTS AND PROFITSiZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSContents
INTRODUCTION

1POLITICAL STABILITY

2

ECONOMIC FUNDAMENTALS

5

ATTITUDE OF WELCOME

12KEY GOVERNMENT POLICIES19INFRASTRUCTURE

21

HUMAN RESOURCES

29

FINANCIAL AND BANKINGSYSTEM

34

EFFICIENCY OF GOVERNMENTMACHINERY/ BUREAUCRACY

36

DOMESTIC BUSINESSENVIRONMENT38QUALITY OF LIFE

39

TAXES & INVESTMENTINCENTIVES43

ZAMBIA - THE ASIANCONNECTION

50ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSZAMBIA
AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSA NOTE FROM THE EDITORIAL TEAM

The publication is structured with the foreign investor in mind who has little knowledge of Zambia.
However, domestic investors will also benefit from this publication.
Investors looking at any country as a base for investments will be examining that nation based onwhat we have called the 10 checkpoints for an INVESTMENT DECISION.

The 10 Checkpoints are:1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Political Stability 		
Economic Fundamentals				
Attitude of Welcome
		
Key Government Policies		
Infrastructure
Human Resources
Banking and Finance
Efficiency of Government Machinery/Bureaucracy
Domestic Business Environment
Quality of Life

Over and above the basic business opportunities such as raw materials, availability of market etc,
it is these that determine whether or not investors will be attracted to invest in a country. In thiscontext, tax incentives, although also important for attracting investors, only become considered if
investors are happy with the status of the 10 checkpoints indicated above.
This publication examines all these issues from the viewpoint of the investor and is a road map, as
it were to profitability that could make Zambia a dynamic emerging economy, and possibly a typeof Switzerland or Singapore in Africa.
Lastly, Zambia Development Agency (ZDA) would like to thank Japan International Cooperation
Agency (JICA) and JJ International Consultants (JJIC) for the tremendous support it has given in
the gathering and verifying much of the information that is in this publication.

Zambia Development Agency (ZDA)

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSiREPUBLIC OF ZAMBIAOFFICE OF THE MINISTER OF COMMERCE, TRADE AND INDUSTRY

It is the private sector that are the engine of economic growth in any country and this is trueof modern Zambia.
The Government of the Republic of Zambia taking a leaf from all successful, dynamic
economies and especially those from emerging Asia has decided that the responsibility ofGovernment is to create the necessary economic and investment environment that will foster
the dynamic growth of the private sector, and consequently the domestic economy.
During the last two decades, Asia and especially the ASEAN economies have become thevirtual role models of successful development, pulling their nations and peoples out of thevicious cycle of poverty.
The fact that the Japanese Government through Japan International Cooperation Agency(JICA), as part of their Tokyo International Conference on African Development (TICAD)
Agenda is prepared to make Zambia a possible pioneering role model of a sustained
programme of action of macro and micro economic endeavour is most welcomed.
The Government of Zambia is committed to work with JICA and other cooperating partners
and international organizations, with similar ideals and sustained programmes, to ensurethat this visionary work indeed succeeds.
Zambia welcomes domestic and foreign investors to make Zambia their profit center inAfrica, either by themselves or in joint collaboration with those who have the management
and technological skills to manifest success.
Thank You.

Hon. Felix Mutati
Minister of Commerce, Trade and Industry

ii

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSZambia and some of her surrounding neighbours

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSiii

INTRODUCTION

Location:

Located in the Southern African Sub-region, Zambia
is a landlocked country bordered by the Democratic
Republic of Congo, Tanzania, Angola, Namibia,
Malawi, Mozambique, Zimbabwe and Botswana.
The mean altitude rises about 1200 meters above
sea level and the country is situated between
latitude 8 and 18 degrees East and longitude 22 and34 degrees South

Capital City:
Lusaka		Land Surface:752,614 Km2Climate:Zambia’s geographical position and high altitude
provides the country with sub-tropical vegetationand climatic conditions. There are three distinct
seasons: 		A warm-wet season (November to April)		A cool dry season (May to August)		A hot dry season(September to October)

Population:

12.1 million, 55% living in urban areas (one of thehighest urbanisation rates in sub-Saharan Africa).
About 46% of the population are between 15 and64 years of age. The annual population growth rateis 2.5%

Independence:

24 October 1964 (from the United Kingdom)

Adult Literacy Rate:

68 % (2008)

Spoken Languages:

English (official language), Other main vernacularlanguages are Lozi, Bemba, Nyanja and Tonga.
There are about 70 other indigenous languages anddialects throughout Zambia

Religion:

Christianity comprises the largest faith group.
Minority faith groups are Muslims and Hindus.
The republican constitution recognises Zambia asa Christian Nation

Natural Resources:

Copper, cobalt, coal, emeralds, gold, water, wildlife,
forestry and hydropower

1

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS1.

POLITICAL STABILITY

Recent Presidential By Elections October 2008
Zambia practices a system of multiparty democracy with Members of Parliament and the President,
who is also Head of State, elected every five years. There is a stable legal environment governedby the rule of law. The major political parties include the Movement for Multi Party Democracy(MMD), Patriotic Front (PF), the United Party for National Development (UPND), Forum for
Democracy and Development (FDD) and United National Independence Party (UNIP).

Downtown Lusaka, throbbing with activity
The Zambian Constitution provides for separation of powers between the Executive (Cabinet),
Legislature (Parliament) and Judiciary (Courts). The country has had no conflict of any kind formore than 30 years, is stable politically, peaceful and is considered to have the friendliest people
in the Southern Africa Sub-region.
ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS2POLITICAL STABILITY

Cabinet Office
What also makes Zambia unique is that all its elections have always been free of violence and thelast election on 28th of September 2006 and the Presidential By-Election of 30th October 2008 aretestament of that legacy.
The African Union and the Common Market for Eastern and Southern Africa (COMESA)
highly praised Zambia’s September 28 2006 tripartite elections.
AU observer mission said in a statement released in Lusaka that the elections of 2006
were conducted in a transparent, free and fair manner and people were able to express
their will without any fear of intimidation. The general administration of the elections
by the Electoral Commission of Zambia was both systematic and well organized.
Another distinctive political characteristic of Zambia is the fact that although there are many
diverse tribes, all co-exist in harmony: “Unity amidst diversity”.
Quote from local businessman:
In comparison to many countries, the political situation in Zambia is stable andconsistentDaniel Nel, Managing Director, Barclays Zambia Plc.
(Investing in Zambia: 2006)

3

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSPOLITICAL STABILITY

Religious Har mony
Throughout the centuries,
religion has tried to foster peaceand harmony.
However intoday’s world, some countries
have chosen to interpret andpractice religion in a way that
it appears to be a destabilizing
force, and in some countries
a source of conflict. Zambia
can be proud of its religious
harmony.

Harmonious co-existence of churches, Hindu temple and mosque
in Lusaka
One outstanding symbol of religious harmony is this prominent
symbol in the heart of the capital Lusaka. A Hindu Temple and a
Mosque, stand side by side, and have churches as neighbours …asilent testimony of “Unity in diversity”.
This is Zambia: ONE ZAMBIA ONE NATION.
Commenting on religious freedom in Zambia, Fr. Keaney, parish priest of the St. Ignatius
Church in Lusaka said,
One of the blessings that all churches in Zambia experience is the level of freedom andindependence in expression of faith.
He also said, having lived in Zambia since 1973, he has not felt or experienced any
hindrance from the government or any other religious group. He also mentioned
during an interview, that Zambia is one of the few countries in the world that has
people from different religious backgrounds and with great freedom to worship.

Zambia has freedom to worship, even though the country is a Christian Nation. The
Government of Zambia allows all religions to follow their own faith and flourish in the
country. There is full harmony among all religions in the country. Here, all religious
communities participate in the economic growth of the country. No religion has any bias
from the society.
Rashid Limbada – Chairman Makeni Islamic Society TrustZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

4

2. ECONOMIC FUNDAMENTALS

Economic Background
On attainment of independence in 1964, Zambia inherited, a strong economy, which has
remained predominantly dependent on copper mining. The immediate post-independence years
were characterized by an economic boom due to high revenues earned from copper production,
representing one of Africa’s best performing economies. With increased State involvement inenterprises from the mid 1970, the economy of the country took an unfavourable and downward
trend.

Zambia forging ahead
Economic Environment
The country’s political turnaround from one-party socialist to a multiparty democracy in 1991
was accompanied by fundamental change in economic re-orientation.
The Zambian Government embarked on drastic economic reforms whose immediate priority
was stabilization of major macroeconomic indicators, encouraging the private sector and theState withdrawing from running enterprises.

5

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSECONOMIC FUNDAMENTALSKey Macroeconomic Indicators
INDICATORS

2002

2003

2004

2005

2006

2007

2008

Inflation (%) (end of period)

26.7

17.2

17.5

15.9

8.2

8.9

16.6

Exchange rate (K per US$)

4,310

4,710

4,780

4,520

3,600

3,830

4,880

Interest rate (%)

50.0

45.3

36.9

27.6

27.9

24.4

26.9

2,702.0

2,846.3

2,999.2

3,153.5

3,356.8

3,563.7

3,769.8

3.0

5.1

5.4

5.2

6.2

6.2

5.8

264,930 270,450

275,830

284,507

293,054

300,966

GDP at Market Prices (K’bn)
GDP growth rate (%)
GDP per capita (K)Sectoral Contribution to
GDP (%):
Agriculture

260,138

15.2

15.2

15.0

14.2

13.7

12.9

12.2

Manufacturing

10.7

10.9

10.9

10.6

10.6

10.2

10.1

Mining

7.9

7.7

8.4

8.6

8.7

8.5

8.4

Tourism

2.3

2.4

2.4

2.5

2.8

2.9

2.9

Construction

6.0

6.9

7.9

9.1

9.8

11.1

11.0

Source: Bank of Zambia, C.S.O, MoFNP
The elements of economic reforms that were implemented included:









Abolition of price controls
Removal of exchange rate and bank interest rate controls
Abolition of foreign currency controls in total
100% repatriation of net profits
Privatisation of state-owned enterprises
Promotion and facilitation of both local and foreign direct investment.
Promotion of exports
Development of the capital market through the Lusaka Stock Exchange

The Government put in place measures to diversify the economy from the traditional (copperand cobalt production) to non-traditional production and exports (products and exports otherthan copper and cobalt).
The non traditional products began to exhibit a positive and favourable performance in value
terms in the country’s balance of payments, notably over the period 2000-2005. The exportof these products more than doubled their value increasing from US$210.8 million in 2000 to
US$923.2 million in 2007.
In the last three years, this has generally been acheived with inflation outturns of 8.2 % and8.9% , in 2006 and 2007, respectively. However, the pass through effects of high international
oil and food prises resulted in the inflation outturn for 2008 being significantly higher at 16.6%
against the target of 7%.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

6ECONOMIC FUNDAMENTALS

Financial Times, July 31 2006
Foreign Investors Think Small
Sudden interest in emerging markets such as Zambia is indicative of the constant searchfor high yield and a willingness to go far to get it.
According to a report this month by the International Monetary Fund (IMF), foreign
holdings of Zambian Government securities – primarily by hedge funds – rose from anegligible amount to US$ 150 million during 2005, mostly in the last quarter. By May thisyear, that figure had risen by 50%.

Inflation
The Government’s fiscal discipline has contributed to significant declining trends in inflation rates.
In 2006 year-end inflation figure stood at 8.2%, the lowest since the liberalization of the economy
in 1991. In 2007 the inflation rate was recorded at 8.9% at the end of the year. Towards the endof 2008, Zambia too was affected by the world financial crises and inflation has edged upwards
and closed at 16.6%. However, the Zambian economy and its financial discipline has proven that
this nation will remain viable.

7

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSECONOMIC FUNDAMENTALSInternational agencies and media report positively:Foreign Debt
Zambia is one of the countries that had been highly indebted to multilateral and other financial
institutions such as the World Bank and IMF.
 		 In April 2005, Zambia successfully reached the completion point of the Heavily Indebted
Poor Countries (HIPC) initiative. The HIPC Initiative, is a debt relief scheme createdin 1996 where international agencies such as the World Bank and IMF agree to provide
limited debt relief for the poorest countries, if they can achieve an accepted standard offinancial discipline, with the goal of bringing countries to a “sustainable” level of debt.
 		 Having attained the HIPC process, the country started benefiting from 100% debt relief
from both the bilateral and multilateral institutions.
The Government’s total external debt stock was estimated at US$1,093.5 million by the end of2008 which is 3.7% more than US$1,054.5 external debt stock in 2007.
This is a strong reflection of the FINANCIAL DISCIPLINE that Zambia has imposed on itself
to be able to join the dynamic growth economies of the globalized world.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

8ECONOMIC FUNDAMENTALS

Booming construction activity
Future Growth Prospects
Zambia has articulated its long term development objectives in the National Long Term Vision
2030. Part of this vision is enshrined in the Fifth National Development Plan (FNDP) 2006 –2010, with its theme of “Broad Based Wealth and Job Creation through Citizenry Participation andTechnological Advancement”. The broad macroeconomic objectives for the Plan period 20062010, are to accelerate pro-poor economic growth, to sustain a viable balance of payments andexternal as well as domestic debt position, and to reduce and stabilise inflation.
Breakdown of Sector Contribution to GDP
KIND OF ECONOMIC
ACTIVITY

2002

2003

2004

2005

2006

2007

2008

Agriculture, Forestry and Fishing

15.2

15.2

15

14.2

13.7

12.9

12.2

Agriculture

6.9

7.1

7.2

6.5

6.3

5.8

5.3

Forestry

5.4

5.4

5.3

5.2

5

4.9

4.8

Fishing

2.9

2.7

2.6

2.4

2.3

2.2

2.2

Mining and Quarrying

7.9

7.7

8.4

8.6

8.7

8.5

8.4

Metal Mining

7.7

7.6

8.2

8.3

8.5

8.4

8.3

Other mining and quarrying

0.1

0.1

0.2

0.3

0.1

0.1

0.1

PRIMARY SECTOR

23.1

22.9

23.4

22.8

22.3

21.4

20.6

Manufacturing

10.7

10.9

10.9

10.6

10.6

10.2

10.1

Food, Beverages and Tobacco

6.4

6.6

6.6

6.5

6.7

6.8

6.8

Textile, and leather industries

1.8

1.8

1.7

1.5

1.4

1.1

0.9

Wood and wood products

0.8

0.9

0.8

0.8

0.8

0.8

0.9

Paper and Paper products

0.3

0.3

0.3

0.3

0.3

0.3

0.3

Chemicals, rubber and plastic
products

0.9

0.9

1

0.9

0.9

0.9

0.9

Non-metallic mineral products

0.2

0.2

0.2

0.2

0.2

0.2

0.2

Basic metal products

0

0

0

0

0

0

0

Fabricated metal products

0.2

0.2

0.2

0.2

0.2

0.2

0.2

Electricity, Gas and Water

2.9

2.7

2.6

2.6

2.7

2.5

2.4

9

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSECONOMIC FUNDAMENTALS

Construction

6

6.9

7.9

9.1

9.8

11.1

11

KIND OF ECONOMIC
ACTIVITY

2002

2003

2004

2005

2006

2007

2008

SECONDARY SECTOR

19.5

20.6

21.3

22.3

23.1

23.9

23.5

Wholesale and Retail trade

18.7

18.8

18.8

18.3

17.5

16.9

16.6

Restaurants, Bars and Hotels

2.3

2.4

2.4

2.5

2.8

2.9

2.9

Transport, Storage &Communications

6.1

6.1

6.1

6.5

7.4

8.3

9.2

Rail Transport

0.4

0.4

0.4

0.3

0.3

0.2

0.2

Road Transport

2.9

2.9

2.8

2.9

2.9

2.9

3.1

Air Transport

1

1

1.2

1.2

1.5

1.8

1.9

Communications

1.7

1.8

1.8

2.1

2.8

3.5

4

Financial Institutions andInsurance

7.9

7.7

7.6

7.5

7.3

7.1

7.1

Real Estate and Business services

9.5

9.4

9.3

9.1

8.8

8.6

8.4

7.7

7.4

7.1

7.5

7.7

8.1

8.8

4

3.9

3.7

3.7

3.2

3.4

3.4

Education

2.3

2.2

2.1

2.4

3.1

3.3

3.9

Health

0.5

0.5

0.5

0.5

0.5

0.4

0.5

Recreation, Religious,Culture

0.3

0.3

0.3

0.4

0.5

0.5

0.6

Personal Services

0.5

0.5

0.5

0.5

0.5

0.4

0.4

Taxes on Products

10

9.3

8.5

8

7.3

6.9

6.9

TOTAL G.D.P. GROWTH

3.3

5.1

5.4

5.2

6.2

6.2

5.8

Community, Social & Personal
Services
Public Administration & Defence/
Public sanitary services

Source: C.S.O
Inter national Trade and the Balance of Payments(a)Traditional exports of copper and cobalt.

(b)

Non traditional export products include ferrous scrap, refined sugar, copper wires, cables
and rods, cotton lint, semi-precious/precious stones, cotton yarn, burley/flue cured
tobacco, petroleum products, fresh vegetables, fresh flowers, gold, coffee, cement and fuzzy
cotton seed and cotton lint. Other significant export products are fertilisers, hydrated lime,
paprika, tea, coal, maize, soya beans, skin leather, asbestos pipes/sheets, groundnuts, honey,

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

10ECONOMIC FUNDAMENTALS

mixed beans, mushroom, fresh eggs and day old chicks, paper, aluminium wires and cables,sorghum, clothing and blankets.
Modern buildings reflect a dynamic Zambia
Zambia mainly imports crude oil, foodstuffs, chemicals, machinery and raw materials.
Zambia’s supermarkets and stores hold a huge variety of imported household and consumer
products and this is one indication of the potential for import substitution that must be
investigated by investors.
The overall balance of payments has improved significantly from a deficit of US $ 416
million in 2000 to a surplus of US $266 million in 2007 representing a significant 163%
improvement.
The country’s balance of payment position in 2008 was adversly affected by the global
economic crisis. Growth in export receipts slowed down significantly in the last quarter ofthe year. Total exports grew by 7.2%, reaching US$ 4,818.3 million, compared to growthof 13% in 2007. Imports increased significantly, growing by 29.7% to US$ 5,202.1 million.
As a result, a current account deficit including capital grants widened to US$ 1,379 million
or 9.1% of GDP from a deficit of US$ 494.2 million or 2.4% of GDP recorded in 2007.
Growing foreign investor confidence in Zambia is reflected in glowing reports in the foreign
media.

11

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

3. ATTITUDE OF WELCOME

Not only the investment environment but Zambia's magnificent Victoria Falls welcomes you

Foreign investment has risen from 255 million dollars in 2003 to over 4.25 billion dollars for 2008.
We are tackling corruption head on, and will continue to do so. We must because corruption saps investor
confidence. We will continue to build a strong Zambia. Our economic policies have made us one of themost stable countries on the African continent. With this stability we have seen record levels of foreign
investment that have modernized our industries and made our farmers more productive. We will continue
to welcome foreign investors to Zambia.
HE Mr. Rupiah B. Banda – President of the Republic of Zambia
Presidential Inaugural Speech on the 2nd of November 2008
The Government of Zambia in seeing the dynamic growth of many Asian nations driven by
domestic and foreign direct investments, seeks to emulate the success of the Asian tiger economies,
it also seeks to maintain links with traditional Western trading and investing partners.
Thus, in understanding the need to attract Foreign Direct Investments, the Zambia Development
Agency, as an Investment Promotion Agency, has embarked on several programmes such as the“Triangle of Hope: Strategic Action Initiative for Economic Development” which is being supportedby the Japanese Government through JICA (Japanese International Cooperation Agency), and the

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

12

ATTITUDE OF WELCOME

Lately, the search has often led them to countries benefiting for the current commodities boom. Zambia,
a major copper producer, is one example, though debt forgiveness and growing confidence in the
Government’s management of the economy have also helped it to attract foreign money.
Financial Times 2006

Public Sector Development (PSD) Programme which is being supported by several cooperating
partners.
The Government of the Republic of Zambia in conjunction with JICA has developed a Business,
Trade and Investment initiative to serve as a stimulus for the promotion of domestic and foreignbusiness, trade and direct investments from Asia into Zambia.
In this context, every effort has been made to ensure that Government policies and administrativeenvironment are investor friendly.
The country’s central location in the region as well as combination of following key strengths
makes it a unique place to invest:










Abundance of natural resources and manpower which are highly under-utilized.
Abolition of controls on prices, interest rate, foreign exchange transactions
Free repatriation of earnings and repayments
Guarantees and security to investors with statutory rights to full and faircompensation
Duty free access to regional markets (SADC, COMESA), wider African and to the
USA markets under AGOA (African Growth and Opportunity Act)banking, financial, legal and insurance services of international standard as well as a
Stock Exchange
Good place to work and live: – sub-tropical climate and vegetation with plenty ofwater and electricity. Friendly people, mostly English speaking with high literacy rate.
Educational establishments to University level. Strong religious values. Open air
lifestyle with nature reserves, game parks, rivers, lakes and waterfalls.
Thriving private sector – Government has successfully privatized most of thepreviously state owned businesses thus encouraging an enterprise culture.

Visa Applications
Obtaining a visa is generally straight forward, provided that all the required documentation isavailable. Visa may be obtained from;The Chief Immigration Officer
New Kent Building
Haile Selassie Road
P. O. Box. 50300
Lusaka. Zambia.

13

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSATTITUDE OF WELCOME

Alternatively visas may be obtained from any Zambian High Commission and Embassies in Asia:
1. Embassy of the Republic Of Zambia      10-2, Ebara 1-Chone, Shinagawa-Ku        C.P.O. Box 1738          Tokyo 142-0063          Japan           Tel: [03] 3491-0121 / [03] 3491-0122        Fax: [03] 3491-0123    
2. Embassy of the Republic of Zambia
Dongsijle
San Li Un
Beijing, 100600
CHINA
3. Zambian High Commission
E-86 Paschimi Marg
Vasant Vihar
New Dehli 110057
INDIA
Tel: 26145883 or 26145785
Fax: 26145764
Email: zambiand@sify.com
4. Embassy of the Republic of Zambia based in Malaysia will be operational in mid
2009.       If the purpose of your visit is BUSINESS, the following guidelines apply:
Consultants and other experts that are entering Zambia to conduct business with an organizationin Zambia can obtain a visa at the port of entry. A “business” visitor must produce an invitation
letter from the inviting institution, and a letter approving the issue of the visa at port of entry fromthe Immigration Department. Arrangements for such a letter can be obtained by the business ororganisation that the business visitor will be meeting with in Zambia. Business visits by a single
individual cannot exceed 30 days in a 12 month period.
Those seeking to do business from outside Zambia, and are in direct contact with ZDA (whichshall be aware of genuine project interest) can obtain a visa at the point of entry by requesting
ZDA to make application on their behalf and must send a scanned copy of their passport showing
picture and details of passport holder.
It is also possible to obtain a visa at Zambia’s entry points for some specified foreign country
nationals (e.g. UK, USA– please check prior to departure). It should be noted that a work permit isrequired before any foreign national can take up employment in Zambia.
Malaysia, Singapore and Pakistan nationals do not require visas if not exceeding more than 30
days.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS14

ATTITUDE OF WELCOME

Setting Up a Business in Zambia
All businesses engaging in both domestic and/or international trade are required by law to beregistered with the Patents and Companies Registration Office (PACRO), an agency of the Ministryof Commerce, Trade and Industry.
Registration is either by: 		 Business name 		 Public or private company (therefore being incorporated in Zambia) or 		 Foreign company
The basic requirements a foreign investor must meet in order to form a company in Zambia are:a)

Select the name of the proposed company, and have alternative names in case the first choice
is not available.
Select the directors
Select the company secretary
Select the registered office
Select the accounting reference
Decide on what would be the authorised share capital
Decide in what would be the purpose of the company
Decide whether they would need to enter into a shareholders agreement
Decide on the articles of association.

b)
c)
d)
e)
f)
g)
h)
i)

The minimum capital required to register a public or private company is K 5 million (USD
1,316). Registration fees (inclusive of name search, forms, processing of application forms) are as
follows:•••

K 85,000 (USD 23) for registration a business name
K245,000 (USD 65) minimum for registering a company (depending on share capital thefee increases by K 5,000 increment for each additional K 200,000 of share capital)
K585,000 (USD 154) for a foreign company

A foreign investor can register either a public company or a private company which maybe private
limited by shares, or companies limited by guarantee or unlimited companies.
However, should a foreign registered company desire, it may register as such in Zambia by lodging
an application for this, and the application must be accompanied by:a)a certified copy of the charter, statues, regulations, memorandum of and articles of associationor other instrument consulting or defining the constitution of the companyb)

In relation to each documentary agent and local director, a statement signed by that person
accepting appointment of suchc)

A statement regarding property acquired in Zambia by the company.

15

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSATTITUDE OF WELCOME

Registration fees for a foreign company are as follows:a)

Registration of a certified copy of the charter, statues, regulations, memorandum of articles
of association or other instruments constituting or defining the constitution of the company
is K 1,000,000.00 (USD 312.5)

b)Registration of any document or making a record of any fact authorized to be delivered, sentor forwarded to the Registrar not specified in (a) above is K 150,000.00 (USD 47.00)

c)Certificate of Registration – K150,000.00 (USD 47.00)

d)Sealing – K 150,000.00 (USD 47.00)

If all the necessary paper work is in place and correctly done, the registration of a company can becompleted in one day.
Legal Framework for Investment Protection
The Zambia Development Agency Act assures investors that property rights shall be respected. No
investment of any description can be expropriated unless Parliament has passed an Act relating to
the compulsory acquisition of that property. Also, in case of expropriation full compensation shallbe made on market value and shall be convertible at the current exchange rate.
Zambia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the WorldBank and other international agreements. This guarantees foreign investment protection in casesof war, strife, disasters, and other disturbances or in cases of expropriation.
Zambia has also signed Investment Treaties with eleven countries. These bilateral investment
treaties are reciprocal agreements between two countries that encourage, promote and protect
foreign investment. These countries are Belgium, Luxemburg, China, Croatia, Cuba, Egypt, France,
Germany, Ghana, Italy, the Netherlands and Switzerland.
Double Taxation Agreements
Some eligible taxpayers find themselves liable to tax in more than one country or territory inrespect of the same income. The predicament of international Double Taxation may adversely
affect the international flow and mobility of human, financial and investment resources, thus theinternational community has devised a mechanism to prevent, eliminate or mitigate the incidenceof Double Taxation.
The countries that Zambia has signed Double Taxation Agreements with include; Canada, Denmark,Finland, France, Germany, Holland, India, Ireland, Italy, Japan, Kenya, Mauritius, Norway, Romania,
South Africa, Sweden, Tanzania, Uganda, United Kingdom, Yugoslavia and Zimbabwe.
In addition, preliminary discussions to come up with Double Taxation Agreements and othertrade facilities with India and Malaysia have commenced. In principle, double taxation agreements
enable offsetting tax paid in one of 2 countries against the tax payable in the other, in this way
preventing double taxation.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS16

ATTITUDE OF WELCOME

Market Access
Zambia’s active participation in the 14 countries region SADC Trade Protocol as well as the Africa
wide 20 Countries COMESA/FTA offers preferential tariff access to total market potential ofnearly 380 million people.
Similarly, with advent of Africa Growth and Opportunity Act (AGOA) duty free access to the huge
USA market has become a reality.
AGOA - Africa Growth and Opportunity Act
This Act provides trade preferences for quota and duty-free entry into the United States for certain
goods, Notably, AGOA expanded market access for textile and apparel goods into the UnitedStates for eligible countries. Some AGOA countries have begun to export new products to theUnited States, such as cut flowers, horticultural products, automotives and steel. Initially, AGOA
was set to expire in 2008. In 2004, the United States Congress passed the AGOA Acceleration
Act of 2004, which extended the legislation to 2015. The Act’s apparel special provision, which
permits lesser-developed countries to use foreign fabric for their garment exports, was to expire in
September 2007. However, legislation passed by Congress in December 2006 extended it through2012.
CONTONOU AGREEMENTThe Cotonou Agreement, provides for reciprocal trade agreements, meaning that not only theEuropean Union (EU) provides duty-free access to its markets for African, Caribbean and PacificNations (ACP) exports, but ACP countries also provide duty-free access to their own markets for
EU exports.
True to the Cotonou principle of differentiation, however, not all ACP countries have to open
their markets to EU products after 2008. The group of least developed countries is able to either
continue cooperation of non-reciprocal trade preferences or the “Everything But Arms” regulation.
Zambia is also a signatory to the Cotonou Agreement, which aims to achieve free trade arrangements
between the EU and the ACP regional groupings.
EBA - Everything But Arms
Everything But Arms (EBA) is an initiative of the European Union under which all imports tothe EU from the Least Developed Countries (LDC) are duty free and quota free, with the exceptionof armaments. EBA entered into force on 5 March 2001. There are transitional arrangements forbananas, sugar and rice until January 2006, July 2009 and September 2009 respectively.
COMESA (Common Market For Eastern and Southern Africa)
COMESA was founded in 1994 to replace the former Preferential Trade Area (PTA) and forms
a formidable market (both external and internal trading) with over 20 member states with apopulation of more than 374 million and an annual import bill of around USD32 billion.

17

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSATTITUDE OF WELCOMECOMESA Member States
1. Angola
2. Burundi
3. Congo DR
4. Comoros
5. Djibouti
6. Egypt
7. Eritrea
8. Ethiopia
9. Kenya
10. Libya
11. Malawi
12. Madagascar
13. Mauritius
14. Rwanda
15. Seychelles
16. Sudan
17. Swaziland
18. Uganda
19. Zambia
20. Zimbabwe

SADC (Southern African Development Community)
SADC was formed with the objective of building a region of high levels of harmonization andrationalization that enable pooling of resources to achieve self reliance and ultimately improve
the living standard and quality of people in this region.
SADC Member States
1. Angola
2. Botswana
3. Congo DR
4. Lesotho
5. Madagascar
6. Mauritius
7. Malawi
8. Mozambique
9. Namibia
10. South Africa
11. Swaziland
12. Tanzania
13. Zambia
14. Zimbabwe

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

18

4. KEY GOVERNMENT POLICIESThe Government has recognized that the private sector must become the engine of growth todrive the economy and create wealth and jobs opportunities for the Zambian people.
Foreign Exchange

Zambia abolished exchange controls in 1994. Companies can bring in capital andrepatriate capital and profit without restrictions.
Interest rates and foreign exchange rates are market determined.
Investors face no restrictions on the amount of interest, profit dividends, management
fees, technical fees and royalties that they are allowed to repatriate. Income earned byforeign nationals may also be externalized without difficulty.

Rule of Law

Zambia legislative power is vested in the Parliament which comprises the President andthe National Assembly. The constitution was last amended in 1996 which covered areas
in governance, legal and judicial doctrines.
These changes included the declaration of sovereignty and democracy resolution tomaintain Zambia as a democratic state, equal rights of men and women, upholding thelaws of the elected state, declaration of the country as a Christian nation and resolution
to remain a multiparty state.
Guarantee against expropriation - The Government of Zambia has long recognizedthat the ability to encourage private investment is the key to stronger economic
performance. The Zambia Development Agency Act of 2006 assures investors thatproperty rights shall be respected. No investment of any description can be expropriatedunless Parliament has passed an Act relating to the compulsory acquisition of thatproperty. Also, in case of expropriation full compensation shall be made on market
value and shall be convertible at the current exchange rate.

Zambia’s imposing Court House and Parliament Building reflect Nation’s stability under ruleand law of Parliamentary Democracy
19

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSKEY GOVERNMENT POLICIESBeing a former British colony, Zambia has a common law system.
The Judicature of Zambia has five layers of Courts which include:






The Supreme Court
The High Court
The Industrial Relations Court
Subordinate Court
Local Court

Equity Ownership The financial sector is fully liberalized and allows for 100% foreign ownership offinancial institutions.
 All projects declared as being in a priority economic sector under the ZDA Act, canbe 100% foreign owned. However the Zambian Government encourages foreigncompanies to have Zambian joint venture partners and the ZDA stands ready t help
foreign companies to find such partners.
Employment of Expatriates
Employers seeking to employ expatriate staff are required to apply for work permits from
Immigration Headquarters. Such permits are usually issued for an initial period of one year with
provision for subsequent extensions or renewals.
Companies that hold an Investment Licence and invest a minimum of US$ 250,000 or employs aminimum of 200 employees shall be entitled to self-employment permit for up to five expatriate
employees.
The fees relating to work permits are indicated below:
Employment/Work Permit				Self Employment Permit

Issuance

K2, 000,000 (US$ 400.00)

Issuance

K1, 500,000 (US$ 300.00)

RenewalK2, 500,000 (US$ 500.00)

RenewalK2, 000,000 (US$ 400.00)

Replacement

K2, 000,000 (US$ 400.00)

Variation

K2, 000,000 (US$ 400.00)

Addition of name

K 500, 000 (US$ 100.00)

Replacement K2, 000,000 (US$ 400.00)

Occupation Change K1, 000,000 (US$ 200.00)
Exchange Rate: US$ 1.00 = K5000.00 as at 30th February 2009
All projects under the ZDA priority economic sectors will indicate to ZDA their expatriate
requirements and once approved ZDA will write recommendation letters to the Immigration
Department to assist the companies obtain the necessary self employemnt and work permits fortheir expatriate staff.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

20

5. INFRASTRUCTURE

Road Network
The Government of Zambia has begun theprocess of rehabilitating the road network in
the country which covers 38,763 km. A fiveand ten year Sector Investment Programme,
estimated at US$411.9 million and US$860.3
million respectively, has continued to generateinterest and an impressive support from theWorld Bank.
International highways link Zambia with South Africa, Zimbabwe, Mozambique, Malawi, Tanzania,
the Democratic Republic of Congo and Namibia.
International road highways link Zambia to nine countries Tanzania, Congo DR, Botswana,
Namibia, Zimbabwe, Mozambique, Angola, Malawi and South Africa. The local highways lead toall provincial centres and towns.
ROAD LINKS TO SEAPORT
Seaports

Neignbouring international seaports link Zambia to the world

21

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSINFRASTRUCTUREa) Beira Corridor
The corridor stretches from Beira in Mozambique via Zimbabwe and Zambia to Lubumbashi
in Congo DR. The corridor is traversed by road with a total length of 1,580km and by rail witha distance of 2,557km.
b) Nacala Corridor
The corridor stretches from the Port of Nacala in Mozambique via Malawi to Lusaka in
Zambia. Nacala can be accessed by road from Lusaka a distance of 1,774km and by road/rail
combination measuring 604km of road and 1,140km of rail.
c) Durban Corridor
The corridor has road, rail and road/rail combination of network from Durban in South Africa
via Zimbabwe, Botswana, and Zambia to Congo DR border. The length of the road via Beit
Bridge on the Zimbabwe-Zambia border to Congo DR border is 2,611km, while the length of
the road to Lusaka via Plumtree on the Botswana-Zimbabwe border is 2,524km. The length of
the rail route via Plumtree to Congo DR is 2,510km while the road/rail combination is 304km
and 2,227km rail.
d) Dar-es-Salaam Corridor
The Corridor stretches from Dar-es-Salaam in Tanzania to Harare in Zimbabwe via Lusaka.
The road/rail combination is 304km road and 2,176km rail.
e) Walvis Bay Corridor
This corridor stretches from Walvis Bay in Namibia to Bujumbura in Burundi via Katima
Mulilo on the Zambian-Namibia border. The road/water combination is 3,151km road and
650km.
f) Mpulungu Corridor
Mpulungu corridor services Lusaka and Malawi via Chipata on the Zambia-Malawi border to
Mpulungu and Great Lakes Region. The distance between Lusaka and Kigali is 1,390km byroad and 650km by water.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS22

INFRASTRUCTURE
Airports
There are four international airports; Lusaka, Livingstone, Ndola and Mfuwe (for chartered flights
only); five secondary airfields and five airstrips serve international and domestic flights.
The Lusaka International Airport is Zambia’s main airport connecting the country with the restof the world. Lusaka Airport is complimented by three smaller airports at Ndola, Livingstone andMfuwe, as well as secondary airfields at Chipata, Kitwe, Kasama, Mongu, Solwezi and Mansa. The
Lusaka International Airport is approximately 20km from the city centre.
Zambia has no national airline but is served by a number of airlines that connect to internationalroutes via Johannesburg, Cape Town, Nairobi, and Dar-Es-Salaam. Zambian Airways is a privately
run airline with regional flights to Johanesburg, Harare, Dar-es-salaam and Lubumbashi, and local
flights to various destinations within the country. The country recently adapted an “open sky
policy” and is currently encouraging the establishment of an air cargo hub for the Southern African
region.
Flights to and from Zambia
There is a thrice-weekly British Airways flight from the Lusaka International Airport to London.
Other international airlines operating in Zambia include South African Airways, Kenya Airways,
Ethiopian Airlines and Nationwide.
For the Asian businessman the best and most direct route would be to fly to Johannesburg in South
Africa and connect by a 2 hour flight to Lusaka.
Direct flights to Johannesburg are available from:

Kuala Lumpur via Malaysian Airlines 		Singapore via Singapore AirlinesHong Kong via Cathay Pacific

Another possible route is through Thailand via Thai Airlines which has connecting flights at Addis
Ababa in Ethiopia to Lusaka. Now there is also a recently launched direct flight into Johannesburgwith Thai Airlines.
The third possible route is through India (Mumbai) via Ethiopian Airline which has connecting
flights at Addis Ababa to Lusaka.
Another route is through India (Mumbai) via Kenya Airways which has a connecting flight fromNairobi to Lusaka.
Rail networkRail transport remains the dominant mode of transportation (83.4%) for goods on thelocal and international routesTwo major rail lines link Zambia to six major African sea ports which are; Dar-esSalaam, Beira, East London, Port Elizabeth, Durban and Cape Town.
23

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSINFRASTRUCTURE
EnergyZambia has abundant energy resources. The most important source of energy is electricity and thisis generated by three major hydro-electric power stations. Other energy resources are petroleum,coal and wood.
ELECTRICITY TARIFFS (2008)
1.

METERED RESIDENTIAL TARIFFS
R1 - Consumption up to 100 kWh
R2 - Consumption 101 to 400 kWh
R3 - Consumption above 401 kWh
Pre-paid			

2.

3.

4.

COMMERCIAL TARIFFS - 15kVA
C1 – Consumption up to 700kWh
SOCIAL SERVICES TARIFFS
Water pumping, Street Lightening
Schools, Hospitals, Churches, Orphanages

Energy charge / kWh
Energy charge / kWh
Energy charge / kWh
Fixed monthly charge

K 77.00
K 127.00
K 207.00
K 7,411.00(U$ 0.02)(U$ 0.07)(U$ 0.06)(U$ 2.12)

Energy charge / kWh

K 141.00(U$ 0.04)

Energy charge / kWh
Fixed monthly charge/ kWh

K 165.00(U$ 0.05)

K 29,607.00(U$ 8.46)

Fixed Monthly Charge
Energy Charge/kWh

K 24,972.00
K 144.00(U$ 7.13)(U$ 0.40)

MAXIMUM DEMAND TARIFFS(I) MDI - CAPACITY BETWEEN 16 - 300kVA
Maximum Demand Charge /kVA/MonthK 8,068.00
Energy Charge/kWh
K 116.00
Fixed Monthly Charge
K 79,018.00(II) MD2 - CAPACITY BETWEEN 301 - 2000kVA
Maximum Demand Charge/kVA/MonthK 15,094.00
Energy Charge/kWh
K 99.00
Fixed Monthly Charge
K 158,035.00(III) MD3 CAPACITY BETWEEN 2001 - 7500 kVA
Maximum Demand Charge/kVA/MonthK 24,973.00
Energy Charge/kWh
K 80.00
Fixed Monthly Charge
K 346,808.00(IV) MD4 CAPACITY ABOVE 7500 Kva
Maximum Demand Charge/kVA/Month
Energy Charge/kWh
Fixed Monthly Charge

K 25,112.00
K 66.00
K 693,615.00

NOTE:
The above tariffs are exclusive of:(a) 3 % rural electrification levy(b) 16 % Value Added Tax (VAT)(c) Exchange Rate- K 3,500.00 = US$1.00 as at September 2008
Source: Zambia Electricity Supply Corporation

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS24(U$ 2.31)(U$ 0.03)(U$ 22.58)(U$ 4.31)(U$ 0.03)(U$ 45.15)(U$ 7.14)(U$ 0.02)(U$ 99.09)(U$ 7.17)(U$ 0.01)(U$ 198.18)

INFRASTRUCTURE

Growing power lines reflect dynamic infrastructure development
WATER TARIFFSDOMESTIC CUSTOMERSConsumption BlockCOMMERCIAL AND
OTHERCUSTOMERSAmount per m3
Kwacha

USD

0-6m3

600

0.17

6-30m3750

0.2130-100m3

900

0.26

100-170m3

1700

Above 170m3

1900

Consumption Block

Amount per m3
KwachaUSD

0-100m3

800

0.23

0.49

100-170m3

1800

0.51

0.54

Above 170m3

2000

0.57

OTHER CHARGES

FEE
KwachaUSD

Communal taps: charge per household per monthK3,0000.86

Sewerage services(percentage of water consumed); Domestic

30%

Others45%

Leak detection fee

K50 000

14.29

Reconnection fee (domestic)

K70 000

20.00

Reconnection fee (others)

K200 000

57.14

Fixed charge per month (domestic)

K4 000

1.14

Fixed charge per month (others)

K10 000

2.86

25

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSINFRASTRUCTURE

MAXIMUM VOLUME FOR ASSESSING UN-METERED CUSTOMERS
Category and Area

Maximum Volume

Maximum Assessed Billing
KwachaUSD

Low Cost Area (e.g. Matero, Mtendere,
Kaunda Square etc)

30m3

K21,600

6.17

Medium Cost Areas (e.g. Kabwata,
Kamwala, Libala, parts of Chelstone etc.)

45 to 55m3

K44,100

12.60

High Cost Area (e.g. Kabulonga,
Woodlands, Roma, parts of Chelstone etc.)

120m3

K115,606

33.03

N.B
1. Discharge of effluent costs K1, 300
per 1 000 litres of disposal
Source: Lusaka Water and Sewerage Company Limited.
Telecommunications
1. Zambia is a member of INTELSAT and accesses an earth satellite station, which provides
telex, telephone and television links with the rest of the world. Broadband internet connections
are easily available and are efficient and reliable. The types of broad bandwidth in Zambia,
uses both fixed and wireless broadband internet access. The fixed broadband internet accessor ISDN is dominated by the state owned Zambia Telecommunication (Zamtel) while otherinternet service providers use MMDS wireless broadband internet access. However, theCommunications Authority of Zambia is yet to start licensing broadband internet access using
spectrum in the 3MHz band and WiMAX.
Over 97 percent of the telephone exchanges are automatic. In the main urban centers public
telephones and privately operated cellular telephone networks are already in place. All towns
are now fully covered by cellular telephone network.
The major firms, which offer mobile phone services are, CellZ (government-owned) Zain
Zambia (formally Celtel Zambia) and MTN Zambia, both are privately owned.
Fibre Optic
Currently there are three Zambian companies that have been licensed to operate as national Carrierof Carriers and have opted to lay fiber optics as a technology of choice. These are ZESCO (www.
zesco.co.zm), Copperbelt Energy Corporation (CEC) (www.cec.com.zm) and ZAMTEL (www.
zamtel.zm).
ZESCO and CEC have completed laying their fiber optic networks. CEC has the fibre connecting
all Copperbelt towns. ZESCO has completed about 1200km from the Western Province via
Livingstone-Lusaka- Ndola-Kitwe-Chingola-Solwezi to Lumwana in North Western Province. A
complete installation countrywide to form the core backbone requires about 3,700km of fibre.
ZESCO and CEC fibre is available at 2.5Gbps. The entire network is to connect Zambia to theundersea cable through the EAssy Project or the SAT 3 cable of the west coast side of Africa
through Namibia/Angola. The fibre will also interconnect to Zambia’s eight (08) neighbouring

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS26

INFRASTRUCTURE
countries.
Industrial Land
Industrial land in the capital city Lusaka is located on the western part of the city. Every city in
Zambia is zoned an industrial area where all manufacturing activities can take place. It is also where
an investor wishing to set up an industry can do so. From 2009 additional industrial zones will be
opened up.
In order to expand the country’s manufacturing base and enhance national competitiveness, theGovernment is establishing industrial parks and will extend tax incentives under the ZDA Act todevelopers of, and investors in Multi- Facility Economic Zones and industrial parks. In addition,
developers of an industrial park will qualify for the above incentives only if:
(a)
(b)
(c)
(d)

The layout of the development plan is approved by the relevant planning authority;
The park to be developed is at least 15 acres in size;
The park will have paved roads; andWater and electricity supply within the park is provided.

These measures are aimed at attracting both local and foreign investors to open up and invest in
the MFEZ and industrial parks across the country.
ZDA will assist all investors to identify suitable land for economic activities and ensure its proper
allocation according to existing laws and regulations.
Land Acquisition and Transfer
A foreign investor can acquire and obtain title deeds over land as long as he is an investor within
the meaning of the ZDA Act or any other law permitting investment in Zambia.
The Government has also approved the establishment of Multi Facility Economic Zones (MFEZ).
These will be industrial areas for both export orientated and domestic orientated industries, withall the necessary infrastructure provided.
The Government has also embarked on an exercise to identify land for the creation of land banks
for purposes of investment activities. This will greatly improve the speed of land delivery forinvestment purposes.
Multi Facility Economic Zones (MFEZ) - The Wave of the Future
In responding to the need for value addition on raw materials and to boost the manufacturingsector, the Government of Zambia has embarked on setting up industrial parks around the country.
The Government has identified an area located in the southern part of Lusaka designated to be
an MFEZ. This is a 2100 hectares piece of land located in the southern part of Lusaka; it is
15 kilometres from Lusaka City and approximately 35 kilometres from the Lusaka International
Airport. The Government of Zambia, supported by JICA and the Malaysian Kulim Hi-Tech
Park (KTPC) are working on a Development Master Plan for the launching of the Lusaka South(MFEZ).
The MFEZ is expected to be ready for investment by 2010.
Zambia-China Cooperation Zone (ZCCZ)The Zambia-China Cooperation Zone is an MFEZ with a total area is 4100 Hectares located in
27

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSINFRASTRUCTURE

High Tech Printing company in Zambia
Chambeshi in the Copperbelt Province of Zambia. The Chambeshi MFEZ has been establishedby China Nonferrous Metal Mining Group with the support of both Governments of Zambia
and China. The MFEZ was declared through a Statutory Instrument. Already several enterprisemainly Chinese businesses have established in the area, including a copper smelter due to open by
the end of 2008.
Catering for both Domestic and Foreign Investors all MFEZ’s will have within or in close proximity
the following features:
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)

Industrial land, cleared, zoned and ready for construction! Speedy approval ofbuilding plans, grant of titles etc.
Road and / or rail linkages to ports (air and sea) and major internal markets.
Electricity – adequate, without voltage fluctuations, blackouts, etc.
Water, uninterrupted supply and depending upon needs – treated or
untreated.
Telecommunications – international direct dialling, fax, direct computer linkage
to parent company overseas, etc.
Waste disposal systems – both toxic and non-toxic wastes.
Executive housing for expatriate and senior staff (and adequate housing forother local staff).
International school for expatriate children. Initial Government support will
be required until sufficient numbers of students are reached, for them to be
independent.
First class hotel facilities, for visiting senior official and staff on temporary
assignments, etc (in proximity to zone).
Adequate medical facilities.

Note: g, h, i, j above, can be, but need not be within the physical area of the zone.
Several other areas have been identified for such similar MFEZs in Zambia. These areas are in
Ndola and Kasumbalesa both are in the Copperbelt Province, and in Nakonde which is in the

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

28

6. HUMAN RESOURCES

Glimpse of Zambia's work force
Employment and Industrial Relations
Legislation governing the rights and obligations of employers and employees is mainly contained in
the 1993 Industrial and Labour Relations Act, which among other things, contains the principle ofemployee involvement, through the medium of works councils. The Act also sets out a framework
for the role of the employer/employee negotiations and prescribes the conditions under which
industrial action may be called. The Act confirms the Industrial Relations Court as the final arbiterof disputes.
We employ 800 workers. There is a harmonious working relationship with the workers in ourgroup. The workforce is intelligent and is adaptable to new technical advancements very quickly. The
commitment to work is good. There are no working days lost due to strikes in our establishments since its
inception. The present economic environment in the country is very attracting and conducive in Zambia.
Mr. Mohmed Seedat, Group Chairman, Melcome Group of Companies(Melcome Group of Companies is in the business of plastics manufacturing, sales anddistribution, pharmaceuticals manufacturing and distribution, engineering industry,financial services and shoe manufacturing. The company has been in the business forthe last 50 years).
In line with the government’s liberalization policy, Zambia’s labour relation continues to be underreview and both the Employment Act and the Industrial and Labour Act were amended in the lastquarter of 1997. The Government is opening up the labour market and in the process playing avery limited role.

29

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSHUMAN RESOURCES

Recognizing that the ideal wage levels result from collective bargaining between employers
and trade unions, the Government is seeking to create an environment that allows only
for minimum involvement from the Government.

The number of registered trade unions had increased from 19 by end of 1996 to 26 by
1998.

A number of legislations have been enacted to protect the rights of both employers and employees
to ensure a harmonious human resource situation for rapid economic development. Theselegislation are being constantly evolved to meet the challenges of a modern globalized Zambia.
These include the following:a)

Employment Act Cap 268.
This is the basic employment law and provides for the basic employment contractual
terms such as: Minimum contractual age Establishment of employment contracts
 Settlements of disputes
 Appointment of labour officers, and Certain conditions of employment, such as ordinary leave, sick leave, maternity,
redundancy and welfare of employeesb)Industrial and Labour Relations Act Cap 269
The Act provides for the conduct of industrial relations, the establishment of workers/
employers organisation, their registration and administration, and he settlement ofdisputes and consultative machinery.

d)

The Minimum Wage and Conditions of Employment Act Cap 276
This Act enables the Minister to determine minimum conditions of employment for
categories of employees not effectively covered through collective bargaining. Suchemployees include general workers, drivers and clerks.

e)Employment of Young Persons and Children Act Cap 274
The Act provides protection for young persons and children in the employment
relationship. It is the major law against child labour and abuse.

f)

Employment (Special Provisions) Act Cap 270
This is an enabling protection and may be activated only when a state of emergency isin place. Under this Act, various regulations may be promulgated with regards to labourand employment.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS30

HUMAN RESOURCES

g)

Factories Act Cap 441
Occupational health and safety in the factory and at places of work

Working Conditions
Basic Salaries, Wages and Allowances
There are normally two categories of employees namely the unionized and non-unionized(management) staff. Conditions of service for non-unionized employees are normally fixed by
top management, while those for unionized employees are negotiated through collective bargain/
agreement.
The Minimum Wage and Conditions of Work Act provides for machinery for determining statutory
minimum wages and other conditions of employment in industries or companies where conditionsof employment are not regulated by a free collective bargaining.
Allowances, which are commonly added to the basic salary, include:

HousingTransportChildren’s medical and educationWater, electricity, holiday travel (usually for senior management staff)

Indicative Monthly Wages
1.
2.
3.
4.
5.

Management Workers – US$ 2,500
Fresh Graduates – US$ 1,400
Technical Staff – US$ 1,000
Manual Labour – US$ 250
Non skilled workers are protected under the minimum wages conditions act which mustbe paid a minimum of K 265,000 (US$65) not including food, transport, allowances which
can be negotiated.
We have been engaged in business in Zambia for over 50 years. We are in thebusiness of steel fabrication and machining. We employ 125 workers. Our
experience with our employees is positive. Educated manpower is available.
Their capacity and willingness to absorb skills is good. We have not experienced
a strike in the last ten years. Since 1991, the opening up of the economy has led
to an increasingly conducive business environment.
- Mr Ashok Oza, Managing Director, Saro Agri Equipment

31

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSHUMAN RESOURCES
All allowances are taxable at the same rate as the basic salary.
Other common non-cash benefits may include:Transport to and from work
Subsidized meals in staff canteen
Sporting and recreation facilities

Pensions and Life Insurance
Membership of a pension scheme may be a condition of employment and most employers maintaina pension scheme for their employees with the National Pensions Scheme Authority (NAPSA).
Employers may establish or join other pension schemes under the Pension Scheme Regulation
Act.
Insurance companies that offer pension schemes include:The Zambia State Insurance Corporation, a state enterprise.
Madison Insurance
Professional Insurance
African Life Assurance

Medical Coverage and Maternity Benefits
Employers are obliged, by the Minimum
Wages and Conditions of Employment Act,to grant an employee full pay should illness
make the employee unable to work, subject toproduction of a certificate from a registeredphysician. The maximum period for whichsuch benefit may be given is three months
at full pay, followed by three months at halfpay.
Some employers provide health and medical
coverage through membership to private
clinics to which the employee and employer
contribute equally. The Act also requiresthat maternity leave, for female employees,
be paid up to 90 days provided such female
employees have worked for a minimum of
twenty-four months with their employers.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS32

HUMAN RESOURCES
Housing
The Employment Act requires employers to provide to employees one of the following:

Housing or housing allowance in lieu thereofHouse loan or advance towards the purchase or construction of a house
Guarantee facility for a mortgage

Working Hours
The normal working hours is 40 hours per week for office workers and 45 hours per week for factory
workers. Office hours are normally from 08:00 hours to 17:00 hours Mondays through Fridays and
08:00 hours to 13:00 hours on Saturdays (for most companies outside the retail sector).
The normal weekly hours should not exceed 48 hours under the Minimum Wages and Conditionsof Employment Act. Overtime work should be paid at one and half times the normal rate andtwice the normal rate on weekends and public holidays.
Paid Holidays
Employers are obliged, under the Minimum Wages and Employment Act, to grant paid leave ofabsence of not less than 24 days annually. It is, however, a normal practice for employers to provide
employees with more leave days than that prescribed in the Act depending on the rank and natureof the employee’s job.
Special Leave
Employers are obliged, under the Minimum Wages and Conditions of Employment Act, to grantan employee 7 days paid leave on the death of an employee’s spouse, child, mother or father. The
Act also obliges the employer to provide for a funeral grant for a standard coffin, cash and food in
the event of death of an employee, spouse registered child or dependant of the employee.
Termination of Employment
A contract of employment may be terminated under the Zambian law through:






Resignation or Dismissal
Normal retirement or medical discharge
Expiry of contract
Redundancy
Death

Zambian Public Holidays
1st January
12th March
EasterEaster
1st May
25th May

1st Mon. in July Heroes Day
1st Tuesday in July		 Unity Day
1st Mon. in August		 Farmers Day
24th October		 Independence Day
25th December		 Christmas Day

New Year’s Day
Youth Day
Good Friday
Easter Monday
Labour Day
Africa Freedom Day

33

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

7. FINANCIAL AND BANKING SYSTEM

There is total freedom in the movement of currencies into and from Zambia. A company canbring in its funds and repatriate its capital and profits without any restrictions and conforming only
to international monetary regulations such as prevention of money laundering activities. While
investors may borrow to invest in Zambia, some financial institutions do not provide loans to nonresidents unless wholly owned Zambian company participants in the business.
The financial system of the country is regulated by the Bank of Zambia (BoZ), which is thecountry’s Central Bank. The 1994 Banking and Financial Services (BFS) Act, recommendationsof BASLE Committee on International Minimum Accounting Standards and the adoption of theCapital Assets Management Earning and Liquidity (CAMEL) rating system have all strengthened
both on-site inspections and the efficacy of the Central Bank in supervising the commercial banks.
Banks and financial institutions are registered and regulated under the Banking and Financial
Services Act.
Monetar y SystemCurrency:
Zambian Kwacha (ZMK)
100 Ngwee = 1 ZMKDenominations:
Notes: K20, K50, K100, K500, K1000, K5000, K10000, K50,000
Coins: None in circulation

Central Bank of Zambia

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

34

FINANCIAL AND BANKING SYSTEM
Banks in Zambia
1.

International Banks
There are several international banks operating in Zambia. The main ones are: Barclays
Bank Zambia Limited; Standard Chartered Bank Zambia Limited; Stanbic Bank Limited;
African Banking Corporation; Citibank Zambia Limited, Cavmont Capital Bank and the
Bank of China. A new bank Access Bank from Nigeria has recently opened in Lusaka as
well, while FNB from South Africa is soon to open.

2.

Indigenous Banks

3.

Finance Bank, Investrust Bank, Development Bank of Zambia (DBZ) and Zanaco.
Joint Ventures with Foreign Banks
Credit Suisse acquired majority shares in Finance Bank which was previously wholly owned
by a Zambian. Indo-Zambia Bank Limited a bank which is jointly owned by the Zambian
Government and three banks from India (Bank of Baroda, Bank of India and Central Bankof India).
Rabobank of the Netherlands acquired shares in Zambia National Commercial Bank Plc(ZANACO) which was a state owned commercial bank.

Banking In Zambia
All major credit cards are readily accepted in urban areas.
ATM facilities are provided by commercial banks. Visitors with VISA and VISA Electron
cards draw cash from VISA ATM’s in Zambia.
Traveler’s cheques (TC) and hard currency bank notes can be cashed at banks, large hotels
or bureau de change. (Please note: proof of purchase of TCs is prerequisite to cashing at theseoutlets).
Over the years Bank’s interest rates have shown a steady yet dramatic decline from 44.1% in2000 to 26.9% in December 2008 (Bank of Zambia).

Finance Bank (Indigenous) and Indo-Bank Zambia Ltd (Joint Venture)
After having remained fairly stable between 2000 and 2004, the Kwacha appreciated strongly
towards the end of 2005 and the beginning of 2006. The appreciation of the Kwacha hascontinued into 2008, driven by the rising of copper prices as well as the country’s attainmentof the HIPC completion and the upward and favourable trend in non-traditional exports(exports other than copper and cobalt).
35

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

8. EFFICIENCY OF GOVERNMENT MACHINERY/BUREAUCRACY
The Government of Zambia has committed itself to creating a business environment thatbenchmarks the best among dynamic developing economies.
Realising that Zambia’s landlocked situation may add to the cost of production and exports of goods,
the Government of Zambia is dedicating itself to creating a competitive investment environment
so that the Government Bureaucracy becomes a friend and an ally to all businessmen.
Realising that delay of Government approvals is a cost; the Government is undertaking a major
initiative to streamline Government approval systems by the introduction of a Clients Charter andIntegrated Approval System mechanism and also e governance.
During the official opening of the first session of the 10th National Assembly, the Late President
Dr. Levy Mwanawasa said his administration would continue the fight against corruption because
this ensures that public resources are protected for the benefit of all Zambians.
The Zambia Development Agency Act of 2006
The Zambia Development Agency (ZDA) Act No 11 of 2006, saw the establishment of the Zambia
Development Agency which came into effect on January 1, 2007. This followed the merger of thefollowing:
1.
2.
3.
4.
5.

Zambia Privatization Agency
Zambia Investment Centre
Export Board of Zambia
Zambia Export Processing Zones Authority
Small Enterprises Development BoardZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

36

EFFICIENCY OF GOVERNMENT MACHINERY/ BUREAUCRACY

The Zambians have demanded for transparency and accountability in the management of publicaffairs and prudent use of public resources. In doing so they have reaffirmed our policy of zero tolerance
to corruption and renewed our mandate to strengthened the institution of governance in our Nation.
The Late Dr. Levy Patrick Mwanawasa, 3rd President of Zambia: 27th October
2006

In order to foster economic growth and development, Government created the Zambia
Development Agency which is tasked with promoting trade and investment in Zambia as well as
streamline bureaucratic procedures and requirements faced by investors. It is an institution thatis client focused, encourages dialogue with the private sector and creates confidence in the public
sectors support for business and overall private sector growth. The Agency encourages the private
sector to take advantage of and benefit from international and regional trade agreements.
The ZDA mission is to promote development by providing effective and comprehensive facilitation
and aftercare services, business development services and market information in order to attract
investment and promote Zambian exports in a transparent, innovative, efficient and competitive
manner that ensures stakeholder satisfaction. The ZDA is mandated to provide and facilitate
support to micro and small business enterprises as well as to promote exports and globalisation.
The Agency promotes Greenfield investments through joint ventures and partnerships between
local and foreign investors
Speed of Approvals
 		Business/company incorporation in accordance with the company law – 2 days 		

Application and approval of foreign currency account – 21 days 		

Tax Registration with Zambia Revenue Authority – 7 days 		

Investment License Approval - 30 days

In respect of foreign investors, the ZDA stands ready to provide the following services:i.

Ensure speedy approval of all Licenses by all Government agencies

ii.

Assist in obtaining work permits for expatriate staff

iii.

Assist in obtaining land for economic projects

37

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

9. DOMESTIC BUSINESS ENVIRONMENTThe ZDA’s main aim is to foster economic development through a whole Zambia strategic viewthat will increase investment and trade levels across the whole country. The Agency will strive todevelop an internationally competitive Zambian economy through innovations that promote highskills, productive investment, and increased trade.
Joint Venture Partners
Foreign investors seeking joint venture partners can approach Zambia Development Agency(ZDA) which operates a registrar of investors together with project profiles of domestic investors
seeking foreign investor partnerships. These domestic investors have been screened and are bonafide Zambian businessmen.
For New Listing on the Lusaka Stock Exchange
A discount of 2 percentage point from a normal corporate tax rate applicable to each sector;
and a further 5 discount of 5 percentage points over and above the 2 percentage point for thosecompanies that offer more than 33 percent of their shares to Zambians.
The realised value of shares sold by the companies listed on the Lusaka Stock Exchange is exempt
from property transfer tax.
Business and Industry Association
Several business and industry associations exist and they are ready to assists all types ofbusinessmen.
Zambia Association of Manufacturers		
P.O. Box 31992, Lusaka
Tel: +260 211 229364/ 222709
Fax: +260 211 229371
E-mail: shyams@zamnet.zm
Zambia Export Growers Association
P.O. Box 31705, Lusaka
Tel: +260 211 221895 Fax: +260 211 221895
E-mail: zega@zamnet.zm
Zambia Association of Chambers of Commerce and Industry
P.O. Box 30844, Lusaka
Tel: +260 211 252369 Fax: +260 211 252483
E-mail: zacci@zamnet.zm
Zambia National Farmers Union
P.O. Box 30395, Lusaka
Tel: +260 211 223222 Fax: 222736
E-mail: znfu@zamnet.zm
ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

38

10. QUALITY OF LIFE

Zambia is safe and friendly nation where foreigners can feel at home and go about their lives in
comfort and security.
I have had the privilege of living in Zambia for the last 3 years due to my work assignment as Resident
Representative of JICA (Japanese International Cooperation Agency). I am very impressed with thepolitical stability of the country and the recent election is a testimony of this. The Zambian people arepolite and friendly. In my experience the political leadership of the country led by the President is very
serious in developing the economy and I feel this country has a good future.
Mr. Eiji Inui, Resident Representative (till September 2007) JICA

Quality of Life for Foreign Investors
Housing
Availability of suitable expatriate accommodation is good in most urban areas. Quality
accommodation include a 3-bedroomed, mostly unfurnished detached house standing in its own
plot, often with a swimming pool and full security provisions.
Full range of furniture is available from local suppliers and it is also possible to have it made toorder from quality Zambian wood at reasonable cost.
Furnished properties can be found including opportunity to rent a flat. New arrivals are recommended
to contact reputable estate agents/realtors, who are listed in yellow pages as well as in a monthly
publication called the Lowdown or in the daily newspapers.
Typical rentals for:a)

One bedroom house/apartment – USD 500 and aboveb)

Two bedroom house/apartment – USD 1,500 and abovec)

Three bedroom house/apartment – USD 2,000 and aboved)

One house within a housing complex with security – USD 3,000 and above

HealthZambia is on a high plateau (1,280 above sea level) is a fairly healthy place to live. Tap water in homes
and hotels is treated but as precautionary measure should be boiled or chlorinated before drinking.
There are many good privately run clinics and hospitals in Lusaka including good dental clinics
for normal health problems. Super specialist medical centres are being developed and encouraged.
Already, a key hole surgery specialist hospital from India is setting up a hospital in Lusaka.

39

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSQUALITY OF LIFE
Vaccinations


Cholera: required if visitors are coming from an infected zoneYellow Fever: required only if visitors have been in an infected zone a week prior to theirarrival into Zambia
Normal Anti-Malarial Precaution

Education
The state educational system is Zambian oriented and therefore, expatriate parents must look for
private schooling for their children. There are satisfactory private infant, primary and secondary
schooling available in Lusaka and other parts of Zambia.
The schools commonly used at present by the international community are:
The International School of Lusaka (ISL)
The school takes children through all stages through reception, primary and secondary education
through IGCSE to International Baccalaureate (IB).
Baobab College
This school runs on the South African schedule and has expanded to include secondary pupils up
to GCSE level. The school is situated in Lusaka and has provisions for day scholars and boarders.
The American International School
The school draws on several sources for
curriculum standards, including US, UK andInternational Baccalaureate (IB). The school islocated in Lusaka
The Lusaka International Community School(LICS)
Prepare children for their respective national
school systems.
Baobab College
The French School
Located at the Alliance Francaise of Lusaka premises in Lusaka.
Other schools include Chengelo Secondary School in Mkushi, Simba International School in
Ndola, and Musikili Primary School in Mazabuka, which all have provisions for day scholars andboarders.
Moreover, there are many nursery schools for children between 2½ to 6 years, which are mostly
privately run and have a good reputation.
Universities
There are three state-run universities in Zambia, one in Lusaka, one in Kabwe (Central Province)
and another in the Copperbelt town of Kitwe. In addition, there are various other tertiary levelinstitutions including the Zambia Institute of Chartered Accountancy Studies (ZICAS) in Lusaka
as well as a number of private universities.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS40QUALITY OF LIFE

View of the University of Zambia
Clothing
Zambians tend to be formal in their business wear. For business/office formal attire is normal. It
can get very cold in the evenings around June and July. For the rest of European summer clothingis ideal.
Shopping
There are a good variety of foodstuffs available from well-stocked supermarkets and mini-markets.
Chemists, stationers and bookshops are well stocked.
Two shopping complexes were recently constructed in Lusaka, namely Manda Hill and Arcades.
These are modern and efficient and will provide for most of the expatriates household needs.
Leisure Activities
Activities such as keep-fit, aerobic, weighttraining, golf, tennis, swimming training,indoor/ outdoor bowling, squash, rugby,
horse riding and polo are available inZambia.
Lusaka has a very good selection ofrestaurants, cafes and cinemas, educationaland cultural services are also provided by
the Alliance Francaise of Lusaka (L’ Alliance
Français de Lusaka).

The Magnificent Victoria Falls - Investors could
find a "veritable pot of gold" at the end of therainbow in Zambia
41

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSZambia has ample opportunity forcamping and the scenery is beautiful.
Weekend breaks are possible at safari
lodges outside Lusaka or Kafue
National Park or Lake Kariba.
The world famous Victoria Falls
in Livingstone and the connecting
gorges provide the best white-waterrafting in the world as well as accessto highest commercial bungi-jump in
the world. Zambia also has a uniquedistinction to provide excellent
walking safaris.
Hotels/Accommodation
Zambia has a number of good business hotels/guests houses in Lusaka, Copperbelt and Livingstone.
Glimpses of some of these used by foreign businessmen include:a) Taj Pamodzi Hotelb) Southern Sun Hotelc) Intercontinental Hotele) Cresta Golf View Hotelf) Livingstone Sunf) Mukuba Hotelg) Chrisma Hoteli) Protea Hotelj)

Savoy Hotelk) Edinburgh Hotel

Lodge on the bank of Lake Kariba

Another option is to use guest houses for short, medium or long staying guests, with living roomand cooking facilities.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

42

11.

TAXES AND INVESTMENT INCENTIVES

Zambia has an open economy with a POSITIVE INVESTMENT ENVIRONMENT, where
Government’s participation is minimized thus paving way for private sector participation.
The Government has recognized that its role is to create a conducive regulatory environment aswell as providing the basic infrastructure to enhance private sector investment.
Taxation and incentive structure in Zambia
The Ministry of Finance and National Planning (MoFNP) is responsible for the formulation of tax
policy, while the Zambia Revenue Authority is responsible for administering the taxes.
The legislative framework of taxation is provided for in the Income Tax Act Chapter 323, VAT Act
Chapter 331 and the Customs and Excise Act Chapter 322, of the Laws of Zambia.
(a)Tax Policy
Company Income Tax (CIT)
CIT rate for Zambia is 35 percent for both resident and non-resident companies.
For companies involved in agriculture, manufacture of chemical fertilizer and non-traditional
exports, the CIT rate is 15 percent; for mining it is 30 percent; 40 percent on bank profits
above K 250 million (USD 78,125).
Personal Income Tax (PIT)
All individuals are liable to tax on personal income accrued after deducting personal relief at
a graduated rate as follows:
Income Bands
K0 – K 700,000 ( US$ 140) per month
K 700,001 to K 1,335,000 (US$ 267) per month
K 1,335,001 to K 4,100,000 (US$ 820) per month
K 4,100,001 (US$ 820) and above per month

Tax Rate
0%
25%
30%
35%

Withholding Tax
Zambia charges withholding tax of 15 percent on rental charges, dividends, interest payments,
management fees and payments to subcontractors.
Presumptive Tax
A presumptive tax at the rate of 3 percent is charged on business income for small scalebusinesses below a turnover threshold of K200 million (USD 62,500) per annum.

43

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

Indirect Taxes
Zambia charges import duty on all imports at the varied rates of zero percent for capitaland basic raw materials, 5 percent for other raw materials and equipment, 15 percent forintermediate goods and 25 percent for finished goods. There is also export duty charged on
scrap metal.

Tax Rates and Incentives
Personal		

10 – 35

Corporate Tax(b)

Manufacturing			

35 %Listed Companies (LUSE)		

33%

Other Companies			35 %Non Traditional Exports		

15%

Mining				30%

Chemical Fertilizer Production

15%

Farming 				

15%Incentive for Industry

Investment Incentives Under The Zambia Development Agency (ZDA) Act
Companies approved under ZDA priority economic sectors will be given the following
incentives. Similar incentives will be available for approved projects within the Multi
Facility Economic Zones (MFEZ) 		 Zero Tax on Profits made by companies in the priority Sector for a period of 5 years
from the first year profits are made. For years 6 to 8 only 50% of Profits should be
Taxed and for years 9 and 10, 75% of Profit should be taxed		 Zero percent tax rate on dividends of companies operating under the MFEZ/priority
sector for a period of five years from the year of first declaration of dividends. Fromyear 6 to 8, only 50% of the profits should be taxed and for years 9 and 10, 75% ofprofits should be taxed 		 Zero percent import duty rate on raw materials, capital goods, machinery including trucks
and specialized vehicles for five years for all priority sector 		 Deferment of VAT on machinery and equipment including trucks and specialized
vehicles imported for investment in the MFEZ/priority sector
Qualifying Priority Sectors entitled to the 5 years tax holiday as above:
1. Floriculture: Fresh flowers and dried flowers

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS44

TAXES AND INVESTMENT INCENTIVES
There over 60 types of rose flowers and 7 varieties of summer flowers are grown in Zambia.
Approximately 145 hectares of land, in the form of greenhouses is dedicated to growing roseflowers whilst summer flowers are grown in expansive open fields. Cut roses are mostly exported
to Holland (70%) while the remaining is exported to South Africa.
2. Horticulture: Fresh and dried vegetables
A major exporter to the European markets with UK and Holland that make up about 80 %.
These products range from baby corn, fine beans, courgettes, asparagus, leek okra and baby
melons.
3. Processed Foods: Wheat flour and other processed foods
4. Beverages and stimulants:i.
Tea and tea productsii.
Coffee and coffee products
5. Production and the processing of the following products in the textiles sector:i.
Cottonii.
Cotton yarniii.
Fabriciv.
Garments
6 Manufacturing and Agro Processing
The manufacturing sector contributes about 11 % to national GDP and about 10 % to
employment. The country’s third largest employer of human resources.
7. Manufacturing of the following engineering products:i.
Copper productsii.
Iron Ore and steeliii. Cobalt
iv. Other engineering products8.

Beneficiation of phosphates and any other related material into fertilizer. Beneficiation of rockmaterials into cement

9.

Production and processing of the following products in the leather sector:
i. Cattle hides
ii. Crust leather
iii. Leather products

10. Building of mini-hydro power stations
11. Education and skill training
12. Information and Communications Technology (ICT):i. Development of computer software
ii. Assembly/manufacture of ICT equipment
13. Health:i. Manufacture of pharmaceutical products
ii. Repair and maintenance of medical equipment

45

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSTAXES AND INVESTMENT INCENTIVES
iii. Provision of laundry services to medical institutions
iv. Ambulance services
v. Medical laboratory services
vi. Diagnostic services
vii. Other medical services eg: setting up and operating a hospital, super specialist medical
services, etc.
The following is the general incentive structure currently in place:
Agriculture
Income Tax
 15 percent tax on income from farming 50 percent depreciation allowance per year for the first two years on machinery used forfarming 20 percent capital expenditure allowance per year for the first five years on farmimprovements 10 percent development allowance per year, up to the first year of production, on capital
expenditure incurred for the purpose of growing coffee, tea, bananas, citrus fruits or similar
plants 100 percent farm work allowance for expenditure on farm land, such as for stumping, land
clearing, water conservation, etc
Mining (base metals)
Income Tax
 30 percent tax income from mining Pre-production expenses deducted in the first year of production and other capital
expenditures deducted in the year incurred 10 years carry forward of losses
Indirect Taxes
Exemption from customs duty in respect of all machinery and equipment (including
specialized motor vehicles) used for exploration and mining activities.
Tourism
Income Tax
 		 10 percent initial allowance and annual 5 percent wear and tear on buildings 		 50 percent depreciation allowance for machinery
Indirect Taxes Zero rated hotel accommodation in the Livingstone district Zero-rating of exportation of goods by a tourist Zero-rating of the supply of an inclusive tour package by a tour operator or travel agent
licensed as such by the Zambia National Tourist Board
Manufacturing
Income Tax

10 percent initial allowance and annual 5 percent wear and tear on buildings andstructures
50 percent depreciation allowance for machinery

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS46

TAXES AND INVESTMENT INCENTIVES

Indirect Taxes Customs duty exemptions exemption on most machinery and equipment used in
manufacturing Zero rate/reduced duty of certain raw materials
 Import VAT deferment on eligible plant/machinery of a capital nature
Private investments are encouraged by the provision of a dynamic and efficient administrative andphysical environment and by the provision of investment incentives as indicated below:
General Investment IncentivesTax credit given where double taxation agreement exists
Investors are permitted to establish bonded factories
Small-scale enterprises are tax exempt for three and five years for urban and rural
enterprises respectively. Customs duty and sales tax on equipment is exempt
Exemption from customs duties on specified machinery and equipment (other thanmotor vehicles) required for the establishment, rehabilitation or expansion of eligible
enterprises

Commerce Income from the export of non-traditional products (i.e. anything, other than copper andcobalt and electricity, produced or manufactured in Zambia but excluding services) is taxed
at 15%.
 Income from the chemical manufacture of fertilizer is taxed at 15%
 Implements, machinery and plant used exclusively for farming, manufacturing, tourism andleasing: Capital allowances are calculated at the rate of 50% on cost
Research and Development Incentives
A deduction is allowed in ascertaining the gains or profits of a business of any expenditure,
not being of a capital nature, incurred by the business during the tax year on experimentsor research relating to the business.
Additional Investment Incentives provided under the 2009 National Budget:(February 2008 - being debated in Parliament)
In addition to the above measures, the Government has provided the following tax incentives totargeted sectors in an effort to attract new investments and consolidate the existing ones:

Increase company income tax rate for income earned from export of cotton lint without
export permit from MCTI from 15 percent to 35 percent
This measure is aimed at discouraging exports of cotton lint (raw cotton) in order to increase local value
addition. This is in recognition of the availability of local processing capacity.



Reduce excise duty on Heavy Fuel Oils of heading 2710.19.20 from 30 percent to 15
percent.
This measure is intended to mitigate the cost of production as Heavy Fuel Oils area a major input in themining and manufacturing sectors.



Remove customs duty on packaging materials (paper board) of subheadings 4811.59.00 and
4811.51.00 currently at 5 percent.

47

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSTAXES AND INVESTMENT INCENTIVESThis measure is intended to mitigate the cost of production of packaging materials as it is one of the major
costs in the manufacturing sector.
Reduce customs duty on the following capital equipment:a)Refrigerating or freezing equipment for cold rooms of heading 8418.69.10 from 25 percent tofree
Fork lift trucks of heading 8427.10.00, 8427.20.00 and 8427.90.00 from 15 percent to free
Track laying bull dozers and angle dozers of heading 8429.11.00 and 8429.19.00 from 5
percent to free
Graders and Levellers of heading 8429.20.00; scrapers of heading 8429.30.00; tamping
machines and road rollers of heading number 8429.40.00; mechanical front ended shovel
loaders of heading of 8429.51.00 and 8429.52.00; pile drivers and pile extractors of heading
8430.10.00; snow blowers of heading 8430.20.00; self propelled coal or rock cutters andtunneling machinery of heading 8430.31.00 and 8430.39.00; boring or sinking machineryof headings 8430.41.00, 8430.50.50 and tamping or compacting machinery of headings
8430.61.00 and 8430.69.00 from 5 percent to free
Survey equipment of heading 9015.10.00 from 25 percent and of headings 9015.20.00,
9015.30.00, 9015.40.00, 9015.80.00 and 9015.90.00 from 15 percent to freeThis measure is intended to reduce the cost of doing business in Zambia by reducing the cost of importing thesecapital goods.
Remove duty on trucks (mechanical horses) of heading 8701.30.00 at 15 percent, 8701.90.10,
8701.90.90 and 8701.20.00 currently at 5 percent
This measure is intended to promote commercial transport services especially that Zambia’s transport services
are constrained by lack of a well developed rail network. This measure is also necessary to boost growth incross border trade and reduce the cost of transport which is one of the major operating costs for business inZambia.



Remove customs duty on special purpose motor vehicles of heading 8705.10.00, 8705.20.00,
8705.30.00, 8705.40.00, 8705.90.00 currently at 15 percent
This measure is intended to reduce the cost of doing business in Zambia by removing duty on specialized motor
vehicles such as fire fighting vehicles, crane lorries, concrete mixer lorries, mobile drilling derricks.



Remove duty on those aircrafts of heading 8802.20.00, 8802.30.00, 8802.40.00 and 8802.60.00
which are currently 5 percent
This measure is intended to encourage investment in the airline industry and encourage competitiveness in the
tourism sector.



Amend the Forth Schedule to the Customs and Excise Act to exclude vehicles propelled by
non pollutant energy sources from payment of carbon tax
This measure is intended to exclude vehicles propelled by non pollutant energy sources from payment of carbon
tax.



Remove customs duty on copper powder, copper flakes and copper blisters currently at 15
percent.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS48

TAXES AND INVESTMENT INCENTIVESThis measure is aimed at encouraging the utilization of expanding smelting capacity in the country. In orderto adequately utilize the local smelters, mining companies will have to import these products from neighbouring
countries.
Compensating Measures:

Increase export duty on cotton seed of heading 1207.20.00 and 5201.00.00 from15 percent to20 percent.
This measure is aimed at discouraging export of cotton seed in order to increase local value addition in view of
the increased capacity to process it locally.



Increase customs duty on mobile cellular phones of heading 8517.12.00 from 5 percent to 15
percent
This is aimed at encouraging local manufacturing of mobile cellular phones.



Amend the provision of Statutory Instrument No 23 of 1994 (The Customs and Excise(Suspension) (Manufacturing Inputs) Regulations in order to simplify procedures for companies
to qualify for duty suspension.
This measure is intended to increase the accessibility of all manufacturing firms to the schemes so as to promote
manufacturing industries across sectors in Zambia.

Incentives for shooting of world class movies locally:

To provide a rebate or refund to filmmakers of up to 15 percent of the expenses incurred inshooting movies locally.
This measure is aimed at job creation, foreign exchange earnings and also has the ability to support many otherspin off industries.

Remove customs duty on materials that are mainly used in the manufacturing and textiles
industry including crude vegetable oil, gray fabric and packaging material.
Incentives for developers:The following additional incentives are porposed for developers of and investors in Multi Facilty
Economic Zones (MFEZ) and industrial parks:
Zero withholding tax on payments of management fees, consultancy fees, interest and toforeign contractors
Zero rate supplies to Developers of MFEZ and Industrial Parks for VAT purposes:Exclude foreign suppliers to Developers in the MFEZ from the Reverse VAT Regime
Exempt equipment, machinery and accessories and materials imported for development ofan MFEZ and Industrial Park from Customs Duty

49

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS12.

ZAMBIA - THE ASIAN CONNECTION

Even as Zambia continues to preserve and cultivate its traditional links with Western Nations, it is
now trying to create a dynamic balance between East and West and is increasingly attempting to build
social, political and economic bridges with dynamic Asian economies.
Some of the prominent Asian business ventures include the following:Japan
Japan has played and continues to play a significant role in Zambia, through the efforts of the
Embassy of Japan and the Japanese International Cooperating Agency (JICA).
Significant among these are:A medium and long term economic recovery programme called the Triangle of Hope (Strategic
Action Initiative for Economic Development) was launched in 2005. The programme is designed
to assist in improving the Zambian investment environment and to attract domestic and foreign
investment into target economic sectors. The TOH is an initiative to ensure that three forces
work together to ensue economic success, i.e political will, civil service efficiency and private sector
dynamism.
A Malaysian consultant was engaged by JICA to advise the Government and the various stakeholders
on the economic sectors that would enable this initiative to take off with concrete results on the
ground.
With JICA’s support the Zambian Government set up 12 Task Forces that provided recommendations
to the Zambian Cabinet. Land locked Zambia was asked to focus on agriculture and agro basedindustries, and 3rd wave knowledge based industries and to improve administrative and physicalinfrastructure.
The key areas of focus are:

Agriculture – to ensure dynamic commercial private sector development and foster agro
based industries. Also to focus on Zambia’s strength in cotton production and encourage
forward integration of the cotton sector.

Information & Communication Technology – To utilize Zambia’s strength in English
language and educated youth.

Tourism – Already this sector is playing a critical role. With the great Victoria Falls andSafari Parks and its safe environment. The sector will be targeted for new investments.



Education – To make tertiary (diploma and degree) education a private sector driven
sector and to make Zambia a regional centre of excellence for education for domestic andforeign students.

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS

50

ZAMBIA - THE ASIAN CONNECTION

Health & Medicine – to make this sector private sector driven, with incentives andGovernment support to ensure that Zambia becomes a centre of excellence where
Zambians and foreigners can seek specialized treatment.



Micro, Small, Medium Scale Enterprises – A well developed strategy can mitigate against
urban unemployment and social unrest. Since the government will never have enoughmoney to support SME’s, recommendations have been made to introduce innovative
incentives for the bigger companies to be encouraged to support smaller companies.



Air Cargo Hub – Zambia to become a cost efficient air cargo center that will encourage
greater international air cargo traffic.

Banking and Finance – Financial agencies are powerful conduits for attracting investment
into the country. The challenge is to create a modern, dynamic financial sector and also
encourage participation of Asian financial institutions.



Multi Facility Economic Zones (MFEZ) – Combining the best features of traditional
industrial parks and export processing zones, the MFEZ is a bold new vision to create“best practice” physical and administrative environments necessary to attract investments.

Streamlining of Government Machinery – To ensure that the civil service become afriend and ally to the business community. The vision is to create clients charters, integrated
approval systems and e-governance that emulates the best that the Asian dynamic economies
have to offer.

The third President of the Republic of Zambia the Late Dr. Levy P. Mwanawasa SC, appointed a
Presidential Steering Committee chaired by the Economic Advisor to the President . The fact that
the JICA Resident Representative has been appointed as one of the two Deputy Chairpersons of
this Steering Committee is indicative of the recognition of the critical role that Japan is playing in the
Zambia to foster the Asian Connection.
This is in line with the Japanese Government’s programme to create private sector driven, southsouth business cooperation as part of its Tokyo International Conference on African Development(TICAD) Agenda.
In addition to the above, Japan is involved in both social, (school, water, etc) and infrastructuredevelopment.
Infrastructure developments include:a) Assistance in the building of 136.4 km of roads in the Lusaka area.
b) Assistance in the building of bridges in the southern part of Zambia near the border to
Botswana.
c) Funding of the Master Plan for the development of the Lusaka South MFEZ.
d) Funding for the Master Plan for the Urban Redevelopment of Greater Lusaka City.
India
1.

TATA Zambia
TATA Zambia was established as a wholly owned company in 1977 and is part of the TATA

51

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSZAMBIA - THE ASIAN CONNECTION
Group. Very recently a motor vehicle assembly plant was commissioned by the then Late
President Mr. Levy P. Mwanawasa in Ndola. Due to its success in other sectors, TATA Zambia
has shown interest in constructing a hydro power station at an estimated cost of US$ 120
million.
2.

Taj Pamodzi HotelIn 1997, the TATA Group took over Pamodzi Hotel which had been Government owned, andmanaged to turn the property around and make it an efficient and successful operation.

3.

Vedanta Mining Resources
Vedanta is an Indian managed company which is registered in London, it registered in 2003
and their principal operations are in India. The core of Vedanta’s asset lies in India, where
they are domestic producers of aluminium, copper, zinc and lead. It acquired 51% shares ofKonkola Copper Mines (KCM) which is the largest copper mining company in Zambia. They
also have substantial assets in Australia with two copper mines.

4.

Lifeline Hospital
Lifeline Hospital of India (Chennai) is finalizing plans to set up a high tech “key hole” surgicalcentre in Lusaka.

China
1.

Zambia-China Cooperation Zone (ZCCZ)This is the first economic and trade zone to be approved by China to be established in Africa. The
ZCCZ is located in Chambeshi, in the Copperbelt, and has been developed from a Greenfield site.
The Zone will mainly be focused on the development of non ferrous metals industry. The company
is expected to invest a total of at least US$ 800 million in the next five years.
Malaysia
Two joint venture projects are being implemented. The first is for the assembly/manufacture ofmobile phones and the other, a college for technical education.
In 2009, Malaysian companies working with international partners have visited Zambia and are
finalizing investigations for:






Repair and maintenance of medical equipment
Medical Laundry
Diagnostic Laboratories
Assembly of Laptops
Universities and Colleges including vocational training etc

In addition Malaysia’s Kulim Hi Tech Park (declared as the Science City of the Future) is involved
with JICA for the preparation of the Master Plan for the Lusaka South Multi Facility Economic
Zone, which is expected to be implemented in 2009.
ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITS52

USEFUL CONTACTS
GOVERNMENT AGENCIES
Zambia Development Agency
P O Box 30819
LusakaTel: +260 211220177/223859
Fax: +260 211 225270
E-mail: zda@zda.org.zm
Website: www.zda.org.zm
Zambia National Tourist Board
P.O. Box 30017
LusakaTel: +260 211 222714 Fax: +260 211 225174
E-mail: zntb@zamnet.zm

Zambia Revenue Authority
P.O. Box 35710
LusakaTel: +260 211 223754/ 229214-8
Lusaka Stock Exchange
P.O. Box 34523
LusakaTel: +260 211 228537/ 228391
Fax: 225969
E-mail: luse@zamnet.zm

BUSINESS ASSOCIATIONS
Zambia Association of Manufacturers
P.O. Box 31992.
LusakaTel: +260 211 229364/ 222709
Fax: +260 211 229371
E-mail: shyams@zamnet.zm

Zambia Export Growers Association
P.O. Box 31705
LusakaTel: +260 211 221895
Fax: +260 211 221895
E-mail: zega@zamnet.zm

SELECTED ZAMBIAN EMBASSIES ABROAD
Japan
Embassy of the Republic of Zambia
10-2 Ebara 1-Chone, Shinagawa-ku
C.P.O. Box 1738
TOKYO 142-0063
TEL: (03) 3491-0121/ (03) 3491-0122
FAX: (03) 3491-0123

United Kingdom
High Commission of the Republic of Zambia
Zambia House, 2, Palace GateLONDON W85NG
TEL: 0044 2075896655/ 0044 2075812142
Fax: 0044 2075810546
Email: immzhcl@btconect.com

China
Embassy of the Republic of Zambia
Donsijle
San Li Tun
BEIJING, 10006000
TEL: 008610- 65321554/ 65321778
FAX: 008610- 65321891

Italy
Embassy of the Republic of Zambia
Via Ennio Quirino Visconti, 8 00193
ROME
TEL: 39 0697613035
TELEFAX: 39 0636088824

India
E-86 Paschimi Marg
Vasant Vihar
New Dehli 110057
TEL: 26145883 or 26145785
FAX: 26145764
Email: zambiand@sify.com

FranceEmbassy of the Republic of Zambia
63, Rue PIRRE CHARRON
5th Floor 750003
PARIS
TEL: 01 56881272/ 01 56881272
FAX: 01 56880350

SELECTED ASIAN EMBASSIES IN ZAMBIAJapan
Chancery
5218 Haile Salaasie Avenue, Longacres
P.O. Box 34190
LUSAKA
Tel: 251555, 252036/39 Fax: 254425, 253488
Website: www.mofa.go.jp/embjapan/zambia
Email: jez@zamnet.zm, jz@zamnet.zm

Indonesia
Chancery
229 Upang Road
P.O. Box 572
Dar-es-Salaam
TANZANIA
Tel: (255) 23908,240886, 20997
Telex: 41575 Indontz

India
Chancery
Pandit Nehru Road, Longacres
P.O. Box 32111
LUSAKA
Tel: 253159/60
Fax: 254118
Email: hc@india.zm

China
Chancery
7430 United Nations Avenue, Longacres
P.O Box 31975
LUSAKA
Fax: 01 251157
Email: chinaemb-zm@mfa.gov.cn

ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSZambia Development Agency
ZAMBIA - AFRICA’S NEW FRONTIER FOR INVESTMENTS AND PROFITSJapan International Cooperation Agency