COUNTRY PROFILE

POLITICS
ECONOMY
BANKING
CAPITAL MARKETS

INSURANCE
INDUSTRY AND MANUFACTURING
ENERGY

ZM
TRANSPORT
TOURISM INVESTORS’ ROAD MAP
AGRICULTURE
MINING
CONSTRUCTION AND REAL ESTATE
ICT
HEALTH

EDUCATION
STARTING A BUSINESS IN ZAMBIA
TAX AND ACCOUNTANCY
LEGAL FRAMEWORK
THE ENTERTAINMENT GUIDE

Z A M B I A
2 0 1 8
 YESTERDAY, TODAY, FOR A LIFETIME
The Zambia National Commercial Bank Plc (ZANACO) was Exchange (LuSE) with 25% floated to the public and
established in 1969 shortly after attaining independence the Zambia National Farmers Union (ZNFU)
to service the financial needs of the Zambian economy accounting for 3%.
and has since evolved into a leading bank nationwide ZANACO has ranked in the top 4 banks over several
popularly known as the People’s Bank. years on key metrics such as asset size, profitability,
In 2007 a 49% stake was sold by the Government of customer base and boasts the widest branch network
Zambia to Rabo Financial Institutions Development B.V. a across the country. With distribution at 68 branches
subsidiary of Rabo bank of Netherlands. The relationship and agencies, over 600 ZANACO Xpress agents, over
with Rabo bank enables ZANACO to benefit from 190 ATMs and over 2,000 POS machines, ZANACO has
technical assistance and best practices in various areas of the largest customer base in the country with over 1
banking. In 2008, the bank was listed on the Lusaka Stock million customers.

Introduced the first automated

1992 teller machines in Zambia.

Oversubscribed initial public offer

2008 in midst of 2008 global financial
crisis.

ACHIEVEMENTS Introduced first mobile banking

Winner of LuSE Corporate 2008 service in the country popularly
Governance award in 2015, known as Xapit.
2013, 2009 and 2008.

Introduced first Visa electron

2010 debit cards in Zambia

2011 Winner of Euromoney’s Best

& Bank in Zambia award.
2012
FINANCIAL PERFORMANCE
The bank’s underlying revenue has continued to be resilient and grew by 13.5% despite the loan book shrinking
following the tough credit conditions in 2016. Key drivers for revenue growth were:

28% growth in fees and commission on Profit after tax in 2016 was ZMW30m from
A C
the back of improved business growth, ZMW118m in the prior year on the back of
and improved collections. investing 14% of annual revenues in the
transformation programme.
24.9% growth in net interest income
B driven by reduced growth in expensive
wholesale deposits and asset re-pricing.

WHAT WE OFFER
Treasury & Investment Management

ZANACO’s Treasury and Investment Management denominations of ZMW5,000 and commonly have
offers risk management solutions that include maturities of 91, 182, 273 and 365 days. The Treasury
hedging products such as Forwards, Exchange Bills auction is conducted every 2 weeks on Thursdays
Contracts and Cross Currency Swaps. The foreign and the Government bonds auction is conducted
exchange services include direct dealing within the every other month.
spot market while over-the-counter cash is provided
at all branches nationwide. In addition, a newsletter Global Transactional Services
detailing current local and global market activities is
issued daily to clients. The Global Transactional Services within ZANACO
ZANACO’s fixed income product offering is in Term provide Cash Management (payments and
Deposits ranging from 7 to 365 days providing collections) solutions, Trade Finance, Domestic and
competitive rates in both the local Zambian Kwacha International payments, Online Banking and
and United States Dollars. These rates are negotiable Merchant Services (Point of Sale Terminals).
for deposits in excess of ZMW1m and US$100,000. The
client can select from the available tenures on offer Financing
based on their cash flow projections and needs.
The bank also facilitates the participation of clients in ZANACO provides a range of financing options ranging
the bidding and settlement process of Government from Term Lending, Syndications, Structured Trade
Securities (Treasury Bills & Government Bonds) on all and Commodity Financing, Working Capital to
offered tenures. Treasury Bills are sold in Agricultural Seasonal & Term Finance.

customerservice@zanaco.co.zm contact centre dial 5000 SMS 5000 on MTN & Zamtel www.zanaco.co.zm
6 CONTENTS ZAMBIA 2018

COUNTRY PROFILE:
12 A Country Abundantly Endowed: The Ideal Gateway into SADC

POLITICS:
16 Politically Stable with Lovely People: Zambia’s Vision to Become a Prosperous Middle-Income Nation by 2030
19 Viewpoint: Edgar Lungu, His Excellency, the President of Zambia
21 Viewpoint: Dr. Kenneth Kaunda, His Excellency, the First President (1964 - 1991) of Zambia
23 Interview: Sindiso Ngwenya, Secretary General, COMESA

ECONOMY:
28 Economically Upward: People Ready to Prosper
33 Interview: Margaret Mwanakatwe - Minister of Commerce, Trade and Industry
35 Viewpoint: Felix Mutati, Minister of Finance
38 A Closer Look at Kasumbalesa Border
40 National Financial Inclusion Strategy
42 Interview: Jason Kazilimani, Managing Director, KPMG
44 How Fiscal Policy has Shaped the Zambian Economy
46 A Pro-Business Approach

BANKING:
52 Funding Development: You Can Bank on Us
57 Banking in Zambia A Long Journey of Ups and Downs
59 Interview: Mizinga Melu, Managing Director, Barclays Zambia
61 The Experience of Alternative Financing in Zambia
65 Interview: Simangolwa Shakalima, Managing Director, Investrust Bank
67 Zambia as an Example of Leap-Frogging Forward through Adaptation of Technology

CAPITAL MARKETS:
70 Capitalising on the situation a trend of upward trajectory
74 Interview: Priscilla Sampa, Chief Executive Officer, Lusaka Securities Exchange
76 Interview: Muchindu Kasongola, Managing Director, and Brian Chintu, Head of Investments, Madison Asset
Management Company
79 Share Analysis: Real Estate Investments Zambia Plc
80 Share Analysis: Standard Chartered Bank Zambia Plc
81 Share Analysis: Lafarge Zambia Plc
82 Share Analysis: Copperbelt Energy Corporation Plc
84 Share Analysis: Zambia National Commercial Bank
86 The Importance of Seed Funds in Emerging Economies
 CONTENTS ZAMBIA 2018 7

INSURANCE:
90 Insurance: Creating Peace of Mind

INDUSTRY AND MANUFACTURING:

96 Made in Zambia: Towards a Well-diversified Manufacturing sector
102 The Odyssey of a Homegrown FMCG Colossus
104 Wiring the Nation
106 Interview: Mukela Lubasi, Acting Managing Director, Lusaka South Multi-Facility Economic Zone
108 Interview: Roseta Chilufya Chabala, Chief Executive Officer, ZAMEFA

ENERGY:
112 A Clean-Energy Country Powering Growth and Development
116 Interview: David Mabumba, Minister of Energy
117 Interview: Victor Mulenga Mundende, Managing Director, Zesco
119 Energy Management Opportunities: Using Energy Efficiency And Time-of-Use Tariff Effectively

TRANSPORT:
122 Logistically Speaking: We ARE Moving Forward!
126 Interview: Brian Mushimba - Minister of Transport
128 New Airlines, More destinations, Greater Frequency
129 Interview: Engr. Robinson Misitala, Managing Director, Zambia Airport Corporation Limited
131 Proflight Zambia Aims to Help Zambian the Economy Take Off

TOURISM:
134 Recognising the Potential: Giving our visitors a Unique African Experience
138 Interview: Felix Chaila, Director General, Zambia Tourism Agency

AGRICULTURE:
142 Agriculture: An Industry Ripe for Growth: Blossoms Displaying the Forthcoming Harvest
146 Interview: Dora Siliya, Minister of Agriculture
148 A Proudly Zambian Company that’s Feeding the Nation

MINING:
152 Geologically Speaking: We are Walking on Wealth
156 Interview: Nathan Chishimba, President, Chamber of Mines
158 First Quantum Minerals Provides Rich Seam of Community Projects
8 CONTENTS ZAMBIA 2018

CONSTRUCTION AND REAL ESTATE:

162 Building Zambia and Going Strong: Infrastructural Development Key Driver of Demand
165 Interview: Shaun Davy, Director, Roma Park
167 A Bright Outlook: Demand Driven by Housing Deficit and Increased Industrial Activity
170 Interview: Sydney Popota, Chief Executive Officer, Real Estate Investments Zambia

ICT:
174 Connecting People, Collecting Profit. The Role ICTs Play in Uplifting Zambia’s Economy
179 Interview: Sydney Mupeta, Managing Director, ZAMTEL
181 Interview: Andrew Kapula, Managing Director, CEC Liquid Telecom
183 Can Zambian Companies Survive the Digital Revolution? A New Era Beckons

HEALTH:
188 Aiming for a Healthier Zambia: Working to Provide more Efficient Healthcare through Increased Coverage and Service
Delivery
194 Interview: Dr. Chitalu Chilufya, Minister of Health

EDUCATION:
196 New Skills: Building the country’s human capital
200 Interview: Dr Alvert N. Ng’andu, Executive Director, ZCAS

STARTING A BUSINESS IN ZAMBIA:

204 Starting a Business in Zambia: A Practical Guide to Procedures
209 Zambian Immigration Wins Kudos

TAX AND ACCOUNTANCY:

210 How are Companies Taxed in Zambia? A Comprehensive Guide to the Tax Framework
214 Interview: Shuko Ndhlovu, Partner, HLB Reliance Zambia

LEGAL FRAMEWORK:
218 Legally Speaking: The legal Aspect of Doing Business in Zambia
222 Interview: Charles Mkokweza, Partner, Corpus Legal Practitioners

THE ENTERTAINMENT GUIDE:

226 Zambia Expat Guide: On a lighter note
232 Lusaka Entertainment Guide
236 Lusaka Restaurant Guide
239 Hotel Guide: A Good Night’s Sleep
246 Radison Supports Art
 CONTENTS ZAMBIA 2018 9

MANAGING PARTNERS: EDITORIAL DIRECTOR:

Baiba Petrusevica Kevin Whitfield
Norman Barrett EDITORIAL INTERNS:
Warren Dzeka
CREATIVE DIRECTOR: Constance Mweemba
Evan Barrett Salatiel Chikko
CREATIVE INTERNS: Agness Shamboko
Beenzu Hindamu Trimpy Morris Kafunda
Martha Kwikwi Victoria Linosi
Stephen Mwila Abigail Hampande
Thomas Engala Gladys Nyirenda
James Kawandami Fanny Kalonda

hello@bri-group.com

BRIG would like to thank its local partners and

collaborators for their support in this project

Matongo Matamwandi Kelvin Chikomo

Lomthunzi Mbewe John Gladston
Martinet Malyo Jessie Chipindu
Lishala Situmbeko Josh Isaacs
Caesar Cheelo Selwyn Isaacs
Shebo Nalishebo Nikki Ioannou
Jito Kayumba Roy Kausa
Gillian Langmead The Kaunda family
Lux Subramaniam
Heather Bender Charlcraft for additional photographs
Nyambe Sumbwa - Zambian Proverbs
10

Kipeshi batendekela kuwamisha mukachi. (Ki Kaonde)

A calabash is first cleaned from the inside.
A person should first put his house in order before he can tell
others to do the same.
COUNTRY PROFILE
Zambia, a landlocked country, bordering eight neighbours

Liberal economy with no price and exchange controls

Young, rapidly growing population with a median age of 16.7

12 COUNTRY PROFILE ANALYSIS

A Country Abundantly Endowed

The Ideal Gateway into the SADC
“Zambia’s central location Zambia, located in the heart of Southern Africa is a land- There are two main seasons, the rainy season that lasts
which borders eight coun- locked country. Zambia’s central location which borders from November to April and the dry season, which is sub-
tries makes it the ideal gate- eight countries, makes it the ideal gateway for reaching divided into the cool dry season (May/June to August),
way for reaching the whole the whole of the Southern African Development Com- and the hot dry season (September to October/Novem-
of the Southern African munity (SADC) region. The political stability Zambia has ber). The average monthly temperatures remain above
Development Community enjoyed since its independence in 1964 and the major 20°C (68°F) over most of the country for eight or more
(SADC) region.” economic reforms it has undertaken since establishing months of the year.
itself as a multi-party democracy in 1991 has led to ongo-
ing attention from international investors. POPULATION:
Today, Zambia has a liberal and open economy with no Zambia is 66th - most-populous country in the world at
price or foreign exchange controls. Copper and cobalt re- 17.3 mlillion in 2017, with that figure estimated to jump to
main by far the major exports accounting for about 70% approximately 20 million by 2022, growing steadily at an
of foreign exchange earnings. The heavy dependence on average of 3% annually. The country has a median age
“Today, Zambia has a liberal base metal exports has made the country vulnerable to of 17, with the working-age population currently standing
and open economy with no significant drops in global copper prices and policies are at more than 50%. Over the last 50 years, the popula-
price or foreign exchange being re-directed to agriculture and other economic tion density of Zambia has grown exponentially from 5.1
controls.” sectors for economic diversification. to 22.3 people per km², with an estimated 40% living in
urban areas.
GEOGRAPHY & CLIMATE:
At 752,614 km² (290,586 sq mi2), Zambia is the 39th HISTORY:
- largest country in the world. It shares borders with the Zambia’s long and complex human history dates back
Democratic Republic of the Congo in the north, Tanzania at least 200,000 years, as shown by the first human fos-
in the north-east, Malawi in the east, Mozambique, Zim- sil ever discovered in Africa. Up until the 4th century the
babwe, Botswana and Namibia in the south, and Angola hunter-gatherer Khoisans were the only ethnic group oc-
in the west. cupying the territory of modern-day Zambia when Bantu
The country is separated into ten provinces and 106 dis- tribes with more developed farming technologies started
tricts, 156 constituencies and 1,281 wards. Lusaka, the migrating from the north. The Tonga tribe were the earliest
capital city of Zambia, is the economic hub of the country settlers among the modern day ethnic groups in Zambia.
,while the mineral rich Copperbelt province is home to the With the introduction of agriculture the population grew
country’s mining activities. and more land was used for cultivation.
Zambia is situated on the plateau of Central Africa, be- By the 11th and 12th centuries, long distance trade was
tween 1,000 – 1,600 m above sea level. The climate of developed exporting ivory, importing cotton textiles, and
Zambia is tropical and, modified by elevation, it gives the copper as currency resulted in the formation of larger
country pleasant subtropical weather rather than tropi- political units and more complex social structures. There
cal conditions during the cool season of May to August. were four organized kingdoms during the period between
 COUNTRY PROFILE ANALYSIS 13

the 16th and 19th centuries in the territory of the modern- drafted. The era of free, democratic elections had began.
day Zambia – the Kazembe-Lunda in the north, the Bem- RELIGION:
ba in the north - east, the Chewa in the east and the Lozi Christianity is the official religion of Zambia however,
in the west. The most powerful states in the pre-colonial many other religious traditions are present. Traditional
Zambia were the Barotseland and the kingdom of Mwata- beliefs are blended with Christian doctrine on many oc-
Kazembe, when the first European traders arrived in the casions. In 2010, 85.5% of the population identified as
18th century. Christians, 11.2% identified themselves as indigenous re-
In 1888, when Cecil John Rhodes obtained mineral ligions. Other religious groups include Bahá’í Faith, Islam,
rights concessions from the local chiefs, both Northern Hinduism, Sikhism, and Judaism.
and Southern Rhodesia (Zambia and Zimbabwe today) The constitution of Zambia declared the nation as “a
where claimed as a colony by the British and was admin- Christian nation while upholding the right of every person
istered by the British South Africa Company, that Rhodes to enjoy the person’s freedom of conscience and religion”.
was managing. As per the Article 1 of the constitution, the nation is a Sov-
In 1923, the British government decided against renewing ereign Secular Republic and as per Article 25, citizens are
the BSAC charter, therefore transferr the administration of free to express thoughts and practice any religion.
Northern Rhodesia to the British Colonial Office in 1924.
In 1928, Northern Rhodesia was transformed by the
enormous copper deposits discovered in the region
which then became known as the Copperbelt and, ten LANGUAGE:
years later, the country was producing 13% of the world’s Although over 70 native languages and dialects are spo-
copper extraction. ken throughout Zambia, English is the official language
In 1953, both Southern and Northern Rhodesia formed is used to conduct official business and is the medium
the Central African Federation, joining too Nyasaland (to- of instruction in schools. There are seven vernacular
day Malawi). Northern Rhodesia was affected by much languages that have official status and together these
turmoil and crises caused by African demands for greater represent the major languages of each province: Bemba
participation in government and European fears of losing (Northern Province, Luapula, Muchinga and the Copper-
political control. belt), Nyanja (Eastern Province and Lusaka), Lozi (West-
An election in 1962 resulted in an African majority in the ern Province), Tonga (Southern Province), and Kaonde,
legislative council and a coalition was formed by two Af- Luvale and Lunda (North - western Province).
rican nationalist parties. The Central African Federation An urban variety of Nyanja that incorporate many borrow-
was dissolved in 1963, which paved the way for North- ings from the English language is widely spoken in Lu-
ern Rhodesia to become the Republic of Zambia on 24 saka, the capital city, while a modified version of Bemba
October 1964. The United National Independence Party in its urban form is the lingua franca of the Copperbelt and
(UNIP) won the pre-independence elections and Ken- the Northern Province.
neth Kaunda was elected as the Prime Minister and later
the same year President when Zambia adopted a presi-
dential system. His left-wing economic policies focused
on central planning and nationalization. When Kaunda EDUCATION:
was re-elected after the initial four years in office, Zam- The right to equal and adequate education for all is en-
bia implemented a one-party system banning all political shrined within the Zambian constitution. Zambia also
forces except UNIP – a move that was formalized in the boasts a better literacy rate than most countries in Africa
new constitution approved in 1973. UNIP became the achieving 85.5% in 2015. The education system in Zam-
sole political power in the country and ruled uninterrupted bia is largely composed of three main structures: Primary
until 1991. education (Grades 1-7), Secondary education (Grades
Between 1975 and 1990 the economy of Zambia de- 8-12) and Tertiary education. Education at the Primary
clined sharply by 30% due to copper prices that were level at all government schools is free, while Secondary
partially caused by the production increase in the then and Tertiary education is fee paying. There are more than
USSR, the second largest copper producer flooding the 30 higher education institutions in 2017, including three
global market. The one-party rule and the poorly perform- public universities – University of Zambia, Mulungushi
ing economy created discontent in citizens, and Zambia University, and Copperbelt University.
was hit by several major strikes in 1981, 1986, 1987, and
1990. The wide-spread unrest made Kenneth Kaunda NATURAL RESOURCES:
realize the need for a major political reform. The ban on Natural resources are plentiful in Zambia. Lying beneath
political parties was lifted and a direct multiparty election its natural splendor are significant deposits of copper, co-
took place in 1991 after a new constitution had been balt, zinc, lead, coal, emeralds, gold, silver and uranium.
14 COUNTRY PROFILE ANALYSIS

Zambia holds 6% of the global copper reserves and is Zambia has unexploited hydropower potential 0f 6000
the fifth largest copper producing nation in the world and MW. Of the country’s total land mass of 752,618 km²,
Africa’s largest producer of cobalt. 47% is arable, of which is currently used agriculturally.
It is estimated that Zambia has 40% of the water resourc- Zambia’s most important crops include maize, sorghum,
es of the Southern African Development Community. The rice, millet, cassava, tobacco, cotton, tea and coffee.
immense water resources found in Zambia not only ad- Maize and wheat are Zambia’s most important sources
dress the irrigation needs of the country’s rapidly devel- of food. The country is not only self-sufficient producer of
oping agricultural sector, but are also used for generating both crops; in 2017 it once again become an exporter of
hydropower as 99.71% of the country’s electricity produc- wheat and maize to East Africa and the Great Lakes Re-
tion is from renewable sources. With a further 2,434 MW gion due to a ban that was lifted in the first half of 2017.
POLITICS
A stable Multi - party democracy for almost three decades

Aim to be a prosperous middle - income nation by 2030

Declared one of the most peaceful countries in Africa

Inclusive, tolerant, compromising of 72 ethnic groups

16 POLITICS ANALYSIS

Politically Stable with Lovely People

Zambia’s Vision to Become a Prosperous Middle-Income Nation by 2030

Zambia is a landlocked country in Southern Africa. tury, advanced kingdoms and empires had been
It neighbours Angola, Botswana, the Democratic established across the area. Since the late 19th
Republic of the Congo, Malawi, Mozambique, Na- century, the various peoples have remained in the
mibia, Tanzania and Zimbabwe. The capital city is current areas where they then established them-
Lusaka, which is in the south-central part of Zam- selves. The late 18th century saw the first Euro-
bia. Zambia has ten provinces that are divided into pean explorers enter the area with more to follow;
103 districts, 156 constituencies and 1,281 wards. David Livingstone being the most famous and his
The population is concentrated mainly around the accounts encouraged the movement of Europe-
main economic centres of the country, namely Lu- ans into the area. By 1888, the British South Af-
saka and the Copperbelt Province. rica Company (BSA Company), led by Cecil John
“the country is culturally Zambia has a population of around 15 million peo- Rhodes, obtained mineral rights in the area and
diverse and one of the few ple, which is comprised of a staggering 72 ethnic later was the administrator for what was known as
countries in the world with groups, most of these peoples speak Bantu-based Northern Rhodesia. This control was ceded to the
very little ethnic/tribal ani- languages. About 90% of the population falls with- British government in 1923.
mosity.” in nine major ethnolinguistic groups. There is a
large community of people from Asia, mostly from INDEPENDENCE:
Chinese and Indian origin, as well as a number On 24 October 1964, Zambia gained independ-
of people of European origin. Due to these differ- ence from the United Kingdom with Kenneth
ent ethnic groups, the country is culturally diverse Kaunda being voted in as the first president and
and one of the few countries in the world with very thereafter Northern Rhodesia became known as
little ethnic/tribal animosity, and this existence of the Republic of Zambia. From 1964 until 1991,
so many ethnic groups/tribes has proved less of Kaunda’s socialist United National Independence
a political problem than in many other countries. Party (UNIP) ruled the country; it was the sole po-
Due to the migration of different groups of peo- litical party from 1972 to 1991 and nationalised the
ples towards economic centres, cultures have economy. In 1991, under growing discontentment
entwined and made these areas very multicultural of the government, Kaunda reinstated multiparty
and vibrant. democracy and multiparty elections were held.
The new political and electoral system in the Re-
EARLY HISTORY: public of Zambia was within the framework of a
The area was initially inhabited by the Khoisan. presidential representative democratic republic.
By the early 12 century, Bantu expansion across This is whereby the President is the head of state
Africa was underway and the area experienced and the head of government, which is within a
an influx of Bantu people. By the late 12th cen- pluriform multi-party system. The government has
 POLITICS ANALYSIS 17

executive power, while legislative power is under pointed by the President and, from outside of the
both the government and parliament. National Assembly, the Speaker of Parliament is
elected.
DEMOCRATIC ERA: Lungu won the 2016 elections with 50.35% of “Lungu won the 2016 elec-
Kaunda lost and handed power over to Freder- the vote and his party, the PF, won 80 of the 156 tions with 50.35% of the
ick Chiluba, of the social-democratic Movement seats. Lungu’s opponent, Hichilema, won 47.63% vote and his party, the PF,
for Multi-Party Democracy (MMD). Government of the vote. There was periodic violence before won 80 of the 156 seats..”
decentralisation was implemented and a period the election, which marred the country’s record of
of social-economic growth occurred. In 2002, peaceful elections, but elections were conducted
Levy Mwanawasa took over from Chiluba until peacefully. The opposition cried foul over the re-
his death in 2008. During this time, the economy sults, as there were delays in the announcement
stabilised, single-digit inflation was attained, there of election results. However, EU observers found
was growth in the real GDP and levels of trade, the elections to be peaceful, and declared the
and interest rates decreased. This could be at- election process free, fair and transparent despite
tributed to foreign investments in mining and the the delays. The head of the AU observer mission
higher global price of copper; nonetheless, it has in Zambia, Goodluck Jonathan, found the elec-
led to the country being courted by foreign inves- tions to be peaceful, but added that the inclusion
tors and aid donors, and a rise of investor confi- of the referendum could have possibly been con-
dence in the country. He has also been credited fusing. Other observer missions found that the
with a reduction in corruption and improved stand- election was free and fair. The leader of the Com-
ards of living in the country. monwealth mission said that it was unfortunate
Rupiah Banda was elected President in 2008 to have had pockets of violence. After the results
and was the Acting President in the interim pe- were announced, members of opposition parties
riod before elections. He was defeated in the 2011 provoked riots in some parts of the country. How-
elections and stepped down. Michael Sata, of ever, the turmoil was short lived and the country
the Patriotic Front (PF), led the country until his reverted back to its known peacefulness.
death in October 2014. With elections to be held
in January 2015, Guy Scott served briefly as the FOUNDATIONAL STABILITY:
Acting President and had to, according to the con- The country has a long-term development plan,
stitution, set presidential elections within 90 days. known as Vision 2030. The Vision resulted from a
Edgar Lungu, of the PF, was elected as the sixth nationwide consultative process that was inclusive
President in January 2015. The elections were by nature. Among other stakeholders, it included
tight, with Lungu winning 48.33% of the votes; just ordinary citizens, civil society, traditional leaders,
1.66% above Hakainde Hichilema’s 46.67% (Unit- government Ministries and cooperating partners.
ed Party for National Development). Opposition As such, it has had buy-in from across the political
parties claimed that there were irregularities dur- spectrum. The Vision entails the peoples’ vision
ing the vote and in the counting thereof. Agitated of becoming a “prosperous middle-income nation
members of different political parties were calmed by 2030”. Vision 2030 furthers this generalised
and no violence occurred. statement into seven broad categories that are
Lungu finished Satas’ term and elections were underpinned by the aspiration to live in a strong
held shortly thereafter on the 11th of August 2016. and dynamic middle-income industrial nation that
In addition to the presidential elections, a refer- provides opportunities for improving the wellbeing
endum to amend the bill of rights and Article 79 of all, embodying values of socioeconomic justice,
was also held. In previous elections, the President underpinned by the principles of:
was elected in a single round of voting, with the
person with the most votes being declared the A) Gender-responsive sustainable development;
winner (”first-past-the-post”) and Vice-president B) Democracy;
appointed after the elections. This was changed C) Respect for human rights;
in 2015 with the President requiring over 50% D) Good traditional and family values;
to achieve victory and to include the election of E) Positive attitude towards work;
the vice-president who could then be appointed F) Peaceful coexistence; and
President if the incumbent was declared unfit to G) Private-public partnerships.
rule. Regarding the National Assembly, 150 mem-
bers are elected via the first-past-the-post system
from single-member constituencies, eight are ap-
18 POLITICS ANALYSIS

In addition, it talks of Zambians’ aspirations for a ing its institutions in order to support growth and
common and shared destiny, united in diversity, development, and maximise the attainment of its
equitably integrated and democratic in govern- development outcomes.
ance, promoting patriotism and ethnic integration.
Further, the nation should have devolved political
systems and structures while retaining the roots POLITICAL MATURITY:
and positive aspects of their own mould of social, In Early 2017, Hichilema, the leader of the op-
cultural and moral values. position was arrested by police and charged with
This process was started in 2005 and presented treason for allegedly obstructing the motorcade of
in December 2006 by the late President Mwana- the President as well as disobeying police orders.
wasa. Although Zambia has had medium-term There were various arguments about Hichilema’s
National Development Plans (NDPs), this was the arrest, such that he needed to be detained in order
country’s first long-term development plan and it to keep the peace in the country. Regardless of
would hereafter guide all future NDPs. political agendas, Hichilema presented law agen-
The country’s current medium-term plan is the 7th cies with the opportunity for his arrest as, by law,
National Development Plan (NDP7) for the period he had to pull over for the police’s blue lights and
2017 to 2021 and has the theme of “Accelerating he did not. During the interview process of this
development efforts towards the Vision 2030 with- document, many of the CEOs were not worried
out leaving anyone behind”. The previous three about the outcome of this event as they realised
NDPs had all been geared towards the attainment a peaceful political solution would be found. There
of Vision 2030’s objectives. was a worry about the short-term perceptions that
The NDP7 builds upon the achievements and les- would be created, but now that this event has
sons learnt during the implementation of the pre- ended without any drama, it is further proof that
vious NDPs, and has deviated from the previous Zambian political issues are dealt with peacefully.
NDPs by moving away from sectoral-based plan- Another exhibition of political maturity in the coun-
ning to a more integrated-development approach. try’s political system was revealed during the in-
This new integrated approach has recognised the terview process. A business leader had seen that
multi-faceted and interlinked nature of sustain- the Government’s Ministries did not make political
able development, which requires interventions to appointments within their Ministries, but selected
be coordinated and approached simultaneously people that were vibrant and passionate about
in implementing development programmes. It is their work, people that wanted to make a differ-
ultimately envisaged that the NDP7’s integrated ence in their country; the Government’s leaders
development approach will help change the focus want to work with the right people for the job. This
of government line ministries and provinces from business leader went on further to say that if one’s
competing against each other to coordinated har- company delivers good quality products and ser-
monisation for the greater good. vices, then one’s company gets opportunities; po-
Regarding politics in the NDP7, it has been noted litical sides didn’t matter.
that the country has undertaken eight successful Other business leaders also commended the po-
elections since the return to multi-party politics in litical maturity of the Government and implemen-
1991. These elections have been characterised by tion of investor-friendly policies. It was said that
“Business leaders also peaceful transitions of power, which makes Zam- the predictability of policy framework is obligatory
commended the political bia one of the most stable countries in Africa. The for the growth of any economy and that they found
maturity of the Government country has recognised that good governance and the policy and regulatory framework satisfactory.
and implementing investor- a stable political framework are necessary for sus- The new constitution of Zambia, which came into
friendly policies.” tainable development as they aid in the promotion effect in 2016, was called an investor-friendly pol-
of a conducive business environment, increased icy document that is innovative and encouraged
market confidence and attract foreign direct in- innovation. It was felt that the Government was
vestment, among others. In the country’s quest to competent and business orientated with its estab-
attain the above, the Government has continued lished long-term plans. One stated that there was
to implement policies that promote transparency, a serious demonstration of commitment to the
accountability and citizen participation as well development of the economy by removing subsi-
as the strengthening of governance institutions. dies, which showed consistency of policy and its
It states that a stable political environment gives implementation.
Zambia an opportunity to continue strengthen-
 POLITICS ARTICLE 19

Forging Ahead
Edgar Lungu, His Excellency, the President of Zambia

A strong economy, which enables the poor to af- penditures. This move was also intended to at-
ford necessities of life and minimises their expo- tract investment, especially in the power sector,
sure to vulnerabilities of whatever form is funda- following our move to migrate to cost reflective
mental to achieving development that is pro-poor tariffs. Growth is projected to strengthen about 4.1
and indeed inclusive. A stable macro-economy, % of GDP in 2017 and this is further expected to
which provides a supportive environment for all to be buoyant in the years ahead as we implement
create wealth and access jobs that lead to pov- our economic stabilisation programme. The har-
erty, vulnerability and inequality reduction, will be vest and electricity production will continue to be
a key priority of focus for my Government. stronger due to the anticipated favourable weath-
er patterns, copper production will also increase
This is in line with our aspirations contained in Vi- because of the improved technology in the mines
sion 2030 and the Seventh National Development and good prices at the international market.
Plan. These aspirations are also firmly anchored
in the United Nations Sustainable Development The appreciation of the kwacha as witnessed in
Goals and the African Union Agenda 2063, all of the recent past – thanks to our good policies – has
which have been mainstreamed in the Seventh helped ease the cost of servicing the external and
National Development Plan. dollar denominated debt. Inflation has continued
to remain at single digits. This is attributed to our
After subdued economic activities, whose growth fiscal consolidation efforts, which have resulted
rate was reduced by 2.9%, in 2015, the Zambian in the economy being stable and working well
economy has rebounded in 2017. It is worth not- for the majority of Zambians. Maize prices have
ing the factors that adversely affected the growth declined significantly. For those in business it is
rate in the recent past in order to inform our poli- now cheaper to import industrial equipment than
cies going forward. Copper prices declined, power before and can pass on the benefits of the cost of
generation capacity also declined due to poor rain- imported goods to consumers.
fall. This negatively affected industrial production
and provision of services. Agriculture production In order to maintain a stronger economy, Govern-
also dropped due to poor rainfall patterns. Con- ment will continue to dismantle the stock of pub-
sequently, domestic pressures arising from huge lic expenditure arrears and improve commitment
demand to meet contractual obligations, mainly in controls and monitoring with a view to ensure
the infrastructure sector, increased. My Govern- that there is no uncontrolled build-up of arrears.
ment reacted boldly with well-intended measures To augment public expenditure management fur-
to remove subsidies and ease pressures on ex- ther, including cash-flow management, the Gov-
20 POLITICS INTERVIEW

ernment will roll-out the treasury single account to our economy from its dependence on mining and
all administrative units under the central Govern- embrace other sectors. There is a need for us
ment. This entails consolidating several accounts to upscale our efforts towards the industrialisation
held by Government institutions, thereby improv- programme. In our quest to achieve industrialisa-
ing utilisation of public funds and reducing admin- tion, our focus will be home-grown industries and
istrative costs. the mandate to undertake this programme has
been given to the Industrial Development Cor-
Regarding debt management, Government will poration. Our efforts of the home-grown indus-
continue to put in place measures to ensure that trialization programme are bearing fruit and we
our national debt remains within sustainable lev- are seeing activity taking shape in such specially
els. Government will, therefore, contract loans - earmarked economic zones such as the Lusaka
only for economically viable projects. Further, South Multi-Facility Zone.
in accordance with the constitution, this August
House will continue providing oversight on public Despite the setbacks experienced in the previ-
debt contraction as debt sustainability is pivotal in ous years, Government is committed to attaining
re-balancing the economy. a resilient and diversified economy. An economy
where all Zambians, young and old, female and
The theme of the Seventh National Development male, rich or poor, not only benefit from develop-
Plan is “Accelerating development efforts towards ment, but also play an active role in its realisation.
Vision 2030 without leaving anyone behindd”. We are pursuing economic diversification and job
creation through value addition and industrialisa-
Unlike previous national development plans, it has tion anchored on agriculture, mining and tourism.
adopted an integrated multi-sectoral approach to The overall success in these strategic areas will
development. This is a smart and more pragmatic be driven by private sector investment, while Gov-
approach to the development of our nation. This ernment will continue to play its role of improving
smart approach entails that sectors will now work the policy and business environment. Develop-
together in clusters to achieve the desired devel- ment is not an accident, but a result of a series of
opment outcomes our people have been yearn- conscious decisions. For this reason, we have set
ing for. The approach will ensure that resources ourselves a transformational agenda to attain a
are not thinly spread to the various sectors. In this smart Zambia. A Zambia where every citizen em-
manner and together, we will end hunger and re- braces a transformational culture. A Zambia that
duce poverty. No one will be left behind. is promoting and maintaining a clean, healthy and
safe environment. A Zambia whose citizens are
In the next five years, our strategic focus is diver- patriotic and put the nation first before self.
sification, value addition and job creation, poverty
and vulnerability reduction, reducing developmen- The path we have taken in accelerating develop-
tal inequalities, enhancing human development ment, through the multi-sectoral approach in our
and creating a conducive governance environ- national development plan, is expected to achieve
ment for a diversified and inclusive economy. Key more for less. With this approach, I am confident
sectors include agriculture, manufacturing, energy that there will be a reduction in developmental in-
and tourism. The time has come for us to wean equalities, poverty levels and vulnerability.
 POLITICS ARTICLE 21

My Vision for Zambia

Dr. Kenneth Kaunda, His Excellency, the First President (1964-1991) of Zambia

The young men and women running our country desk in State House from which the republican
today have their work cut out for them. All their president guides our beloved nation. Government
fellow countrymen are looking to them to maintain has provided us the general picture. About 80% of
our peace and stability and are also highly expect- our population live in the rural areas and the vast
ant of jobs and opportunities. It is famously said majority need to be lifted out of poverty. Para-
the world has become a global village. Political doxically, 95% of foreign direct investment has
and economic interaction with actors outside of been directed into the mining sector with agricul-
our country’s borders is not only unavoidable, ture and manufacturing ending up with less than
but happens at amazingly lightning speeds. Ob- 4%. It therefore makes sense to do a rethink on
viously the room to manoeuvre amidst a morass this equation. And rethinking is what we have al-
of constantly changing international issues and ways been doing since independence. Minerals
challenges is limited. This is compounded by the are, needless to say, a diminishing resource and
fact that Zambia is a small, relatively undeveloped we must, if we are to survive, veer away from that
nation sitting on comparatively large mineral and sector and direct investment into agriculture.
natural resources.
Like many of my compatriots, I do have a personal
Wealth is unevenly spread and this needs to be vision for my republic. First of all, I am an eternal
corrected. Now, how do I answer the questions optimist. And I cannot talk about the future with-
you raise, which themselves raise so many other out referring to my creator, the Lord God Almighty,
questions concerning the present and future wel- who has given us our marching orders to obey
fare of our country? I fall back on what I consider Him by being of service to His people, namely our
to be the basics and I will deliver my answers in fellow men and women. We must love Him, and
broad strokes. This is because I have not sat, in after that we must love them. We must do unto
these many years, at that lonely and challenging others as we would have them do unto us.
22 POLITICS ARTICLE

Zambia is a Christian nation and so declared in do. This was our guideline and it informed our vi-
the preamble of our constitution. Therefore if you sion at any one time. I encourage every President
ask me for only three signs of hope in the Zambian of the day not to meander too far from this primary
economy, this would be the first one. The second principle. Yes, improving the bottom line will al-
would be that throughout our history we have been ways remain important as we work to grow our
a people of dialoguers, if there be such a word. At economy, but far more important is not to forget
all our points of crisis we have always managed to a single human being in the fight against poverty.
talk over our problems and move on, in peace and
stability, often into unknown spaces. The third is The diversification of our economy is directly re-
that Zambians are a communal people. Bent more lated to the reason why we engaged in the strug-
often than not on helping those less fortunate than gle for freedom. We felt that our colonial masters
themselves. I believe that economic challenges were suffocating our desire for free enterprise. We
will always exist, but so too will our natural incli- were defined as hewers of wood and drawers of
nation to hold fast to these cultural norms. This water and capable of nothing else. Yet, what we
background forms a central pillar in my hopeful vi- wanted was to own our own land, our own busi-
sion for Zambia. nesses, fly our own planes; in effect we desired
to plot our own destiny. So, even today, we must
Yes, I know I have not given you my faith in our continue with more vigour to incubate and support
economy in terms of trends and indices. But SMEs, cooperatives and the like to promote the
which economy that benefits the masses can exist diversification of our economy. In short, diversi-
in the midst of the chaos of wars and conflict? Our fication will work if we invest adequately in the
ability to maintain our peace and stability through people in proper tandem with the development of
six presidential regimes is the primary indicator to supportive infrastructure. The handshaking with
current and potential investors that Zambia is a our foreign partners will be more successful if we
good destination for their capital. On the Zambian maintain an eagle eye on this process. Our aim
side of the equation we need to do more in terms should be quality products that will satisfy local,
of improving our one-stop shop for our investors. regional, continental and international markets.
We also need to have a clear dos and donts list so Our success will be determined by how well
that the investors do not find booby traps as their -thought our plans are and how strong our political
works progress. will is to implement them.
When my colleagues and I governed in the first
and second republics our thrust was that the hu- I shall, as a final word, say this to our investors
man being was the centre of all that we say and from outside Zambia. You are truly welcome.
 POLITICS INTERVIEW 23

Together, We Can
Sindiso Ngwenya, Secretary General, COMESA

BRIG: How can COMESA distinguish itself from

other regional groupings as a venue for economic
cooperation?

Sindiso Ngwenya:
Over the years, COMESA has focused on the the establishment of the mechanism in 2008, 204
gradual transformation of isolated national mar- NTBs have been reported among COMESA Mem-
kets into a single regional market for Eastern and ber States and 199 have been resolved, resulting
Southern African countries. Remarkable achieve- in a success rate of 98%.
ments have been made, especially in trade lib- COMESA implements a wide range of pro-
eralization and facilitation through reduction and grammes including trade, infrastructure, invest-
elimination of tariff and non-tariff barriers between ment, agriculture, industrialization, peace and se-
Member States. curity among others. COMESA’s trade facilitation
COMESA launched a Free Trade Area (FTA) in instruments are the benchmark on the continent.
November 2000 with the aim of facilitating re- They range from transit traffic facilitation, pay-
gional integration through zero custom tariffs on ments, infrastructure and transport corridor devel-
goods traded among the Member States. The FTA opment, and free movement of persons and trade
provides for rules that prohibit the re-imposition of in services. Some of our flagship programmes
custom duties and non-tariff barriers, with sys- that make COMESA stand out on the continent
tems for addressing any trade barriers that may include:
come up. Since the establishment of the COME- • The COMESA Carrier’s License: It allows
SA FTA, intra-COMESA total exports increased commercial goods vehicles to use one li-
from $1.5bn in 2000 to $8bn in 2016 representing cense to operate in all Member States;
433% growth. COMESA also launched a Customs • The Regional Customs Transit Guarantee
Union in June 2009 and it is in the process of be- Scheme (NTGC): A customs transit regime
ing operationalized. designed to facilitate the movement of goods
The Regional Economic Communities of COME- under customs seals in the COMESA region.
SA, EAC and SADC, under the Tripartite Agree- It provides the required customs security and
ment, are implementing an online mechanism for guarantee to the transit countries;
reporting, monitoring and eliminating NTBs. Since
24 POLITICS INTERVIEW

• The Yellow Card Insurance Scheme: A business forums in clusters, developing trade
regional third party motor vehicle insurance information system, which could be accessible
Scheme which provides third party legal li- online, developing a regional supply chain strat-
ability cover and compensation for medical egy to regional manufacturers, as well as setting
expenses resulting from road traffic accidents up trading houses to facilitate the distribution of
caused by motorists visiting countries in the goods. COMESA Member States should adhere
Scheme to the NTB resolution time frames set out in the
• COMESA Virtual Trade Facilitation System COMESA regulations on NTBs to ensure timely
(CVTFS): An online system that integrates resolution and harmonize the sanitary and phy-
other COMESA trade facilitation instruments tosanitary measures through the implementation
(Yellow Card, RCTG, Carrier License Harmo- of the COMESA Green Pass to facilitate trade in
nized axle load etc.) on one platform. It also agricultural products, which constitutes the bulk
helps to monitor cargo along different trans- of the intra-regional trade, and fast-track the on-
port corridors across the region. going COMESA transport infrastructure projects.

COMESA has also established various special- BRIG:How can you help COMESA members keep
ized institutions and agencies, some of which economies open, thereby avoiding trade-restric-
have now become continental and global institu- tive measures?
tions; They include the Trade and Development
Bank, PTA Reinsurance Company (ZEP Re); the Sindiso Ngwenya:
African Trade Insurance Agency (ATI); COMESA Regional integration is a key strategy for devel-
Clearing House, Leather and Leather Products opment and intra-regional trade. Intra-regional
Institute, Council of Bureaux on Third Party Mo- trade plays a significant role in accelerating eco-
tor Vehicle Insurance Scheme; Federation of Na- nomic growth and poverty reduction. COMESA’s
tional Association of Women in Business. Vision is to be a fully integrated internationally
competitive regional economic community within
BRIG: What barriers currently hinder trade among which there is economic prosperity and peace as
COMESA members and how can their effects be evidenced by political and social stability and high
mitigated? living standards of its people. The Mission is to
“endeavor to achieve sustainable economic and
Sindiso Ngwenya: social progress in all Member States through in-
Intra-COMESA exports, as a proportion of global creased co-operation and integration in all fields
total exports, remains low accounting for 11% in of development”. Therefore, regional integration is
2016 compared with 61.6% in the European Un- important in achieving COMESA’s Vision and mis-
ion and 24.5% in the Association of Southeast sion and Member States should be encouraged to
Asian Nations. Intra-COMESA trade remains eliminate trade restrictive measures by:
low relative to its potential estimated at $82.4bn • Fast-tracking implementation of the Digital
in 2014. The key factors hindering the growth in Free Trade Area (DFTA) which aims at em-
intra-COMESA trade are reliance on related cat- powering traders to do cross-border trade
egories of agricultural, mineral and other raw or using Information and Communication Tech-
semi-processed commodities, non-compliance in nology (ICT) as a tool to minimize physical
the implementation of the member states obliga- barriers and providing traders with the nec-
tions, poor transport and communication infra- essary digital tools and infrastructure they
structure, high transport costs, limited information need for enhancement of intra-COMESA and
on available market opportunities in other Member global trade.
States and potential clients within the region, com- • Ensuring implementation of the COMESA
plex customs procedures and non-tariff barriers. Competition Regulations. The regulations
To mitigate effects of these barriers, there is a prohibit certain anticompetitive business
need to diversify their export products and pro- practices as incompatible with the objectives
mote value addition in their commodities, facilitate of the Common Market in so far as they af-
business enterprises to penetrate the local dis- fect trade between Member States. The goal
tribution networks through organizing trade fairs, of the Regulations is to safeguard competi-
 POLITICS INTERVIEW 25

tion in the Common Market to enhance intra- liberalization;

regional trade, protecting consumer welfare • Contributing to improvement of the global
and ensuring efficient allocation of resources competitiveness and resilience of economies
in the Common Market. and industries so that they can take advan-
• Utilizing the COMESA Adjustments Facility tage of new market opportunities through
(CAF) which is a special facility of the COME- support to productive infrastructure and in-
SA fund with the objective of providing adjust- vestment in developing new products, pro-
ment support to implement regional integra- cesses, and technologies;
tion and trade related programmes within • Easing the movement of persons, goods and
COMESA Member States. in services within the region by ratifying and
implementing the Protocol on the Gradual
The CAF provides support to eligible Member Relaxation and Eventual Elimination of Visa
States for social and economic costs adjustments Requirements, and the Protocol on Free
which include: Movement of Persons, Labour, Services, the
• Addressing the loss of customs and other re- Right of Establishment and Residence.
lated tax revenues and other conditions in a
sustainable manner; Since the adoption of the COMESA Free Move-
• Contributing to the implementation of policy ment Protocol in June 1998, only Burundi, Kenya,
reforms designed to improve the efficiency of Rwanda and Zambia have signed, and Burundi
domestic markets, the business environment, being the only country ratifying it. Mauritius,
facilitating the reallocation of capital, labour Rwanda and Seychelles have since waived vi-
resources and assisting firms in meeting the sas to all COMESA citizens, while Zambia has is-
cost of compliance to new obligations and fur- sued a circular waiving visas and visa fees for all
ther meet the social and economic costs of COMESA nationals on official business.
26

Akaboko, kakonka akabiye. (Bemba)

A little arm follows another.
A person gets help from those he helps. One good turn de-
serves another.
ECONOMY
Zambia’s long-term economic plan well on track

Government’s policy reforms give way to accelerated GDP growth

Stable and predictable policy environment ensures macroeconomic stability

Zambia named among the top 10 improvers in 2018 by the World Bank
28 ECONOMY ANALYSIS

Economically Upward
People Ready to Prosper
HISTORICALLY SPEAKING:
For more than 100 years, Zambia’s economy has Between 2006 and 2015, the Gross Domestic
been driven by the copper mining industry with it Product (GDP) had experienced growth at an aver-
contributing the majority of foreign direct invest- age of 6.9%. During this time, the inflation rate has
ments and earnings. In the mid-1960s, Zambia decreased to single digits. In 2015, however, the
gained independence and towards the end of the GDP dropped to 2.9%, which was due to a decline
1960s, the government of Zambia implemented a in commodity prices, depreciation of the Kwacha
policy of nationalisation. Thereafter the country’s and low power generation. This was despite an in-
economy declined, which was partly caused by crease in government spending on infrastructure
the downward turn of the global copper price. The projects. In 2016, GDP growth was 3.4%. The
economy never recovered and by the early 1990s, World Bank has forecasted Zambia’s 2017 GDP
privatisation of state companies was implement- growth rate at 3.8%. In the World Bank͛s 2018 Do-
ed. This saw the economy recover and invest- ing Business report, Zambia came among the top
ment in the country grow. In order to gain access 10 improvers with a forecasted GDP growth rate
to international financing, several policy reforms of 4.3% in 2018 and 4.7% in 2019. This has been
were required. These reforms have been aimed at credited to the government’s policy reforms. The
“The country’s long-term opening market access and boosting business op- IMF has raised concerns about the country’s ris-
plan is to make Zambia a portunities. The country’s long-term development ing external debt and public sector wage bill. As
prosperous middle-income plan, known as Vision 2030, is to make Zambia such, the government has for the first time pub-
country.” a prosperous middle-income country. The coun- lished a medium-term debt strategy that can be
try has medium-term development plans that are updated annually as progress is made.
used to achieve the broad aim of Vision 2030. In October 2015, inflation levels rose to over 14%,
The current medium-term development plan is which was largely due to the depreciation of the
known as the Seventh National Development Plan Kwacha. Inflation reverted back to single digits in
(7NDP), which runs from 2017 to 2021. 2016. The Consumer Price Index (CPI) was re-
corded at 199.84 in November 2017 in compari-
RECENT ECONOMIC DEVELOPMENTS: son to 188.0 in November 2016. The inflation rate
“The government has en- Growth in the economy has continued to depend was measured as 6.3% in November 2017, which
couraged, through policy on the copper industry. This has made the coun- moved downward from 6.4% the month before.
reforms and investment try’s economy vulnerable to commodity price This downward movement has been attributed to
incentives, the diversifica- fluctuations. Due to this, the government has en- lower fuel prices.
tion of the economy.” couraged, through policy reforms and investment Necessitated by the Government’s increased in-
incentives, the diversification of the economy by frastructure investments, the Government’s bor-
building the manufacturing and agricultural sec- rowing has risen and the pressure on lending
tors, amongst others. rates (averaging above 20%) has been largely
 ECONOMY ANALYSIS 29

due to stringent monetary policy measures. This of income inequality has increased over the last
is against the backdrop of the need for increased decade. When one looks at the Gini coefficient in
borrowing to fund infrastructure development; the urban and rural areas, the former has decreased
infrastructure gap is seen as a binding constraint during this period, while the latter increased.
to the country’s growth. This explains the fiscal Over the past decade, there have been recorded
deficit with a percentage of 9.4% in 2015, which improvements in certain socio-economic indica-
fell to 5.7% in 2016. In a joint IMF and World Bank tors. Access to safe drinking water has significant-
assessment, Zambia’s external debt risk has been ly increased from 58% to 67.7%. Regarding urban
determined as moderate and its macroeconomic and rural areas, access increased from 88% to
policies have been acknowledged for the role 89.2% and from 42% to 51.6% respectively. Sani-
they have played in ensuring sustainability. How- tation logged marginal improvements from 20% of
ever, greater diversification of the country’s export households having access to improved sanitation
base, strong debt management and improved to 25% of households; there was a 2% decrease
project appraisals were recommended to maintain in urban areas to 35% and an increase of 7% in
debt sustainability. rural areas to 19%. Access to electricity improved
from 22% to 31%; urban areas’ access increased
INTERNATIONAL TRADE: from 53% to 67.3% and rural areas’ access de-
In terms of international trade, traditional exports creased from 5% to 4.4%. Improvements in health
refer to metal (mostly copper) exports, while non- facilities and services have generally yielded posi-
traditional exports (NTEs) refer to any other ex- tive results.
ports. The trade surplus/deficit is dependent on There are a number of social protection inter-
copper exports and its global price. Between Sep- ventions in place to assist incapacitated house-
tember and October 2017, metals and their prod- holds and vulnerable people to live decent lives;
ucts contributed just over 70% to total exports. these interventions include social cash transfers,
The trade deficit in October 2017 was K885.2m, school feeding schemes and food security packs.
which was a reduction of 58.4% from K2,125.6m Households and people within these programs
recorded in September 2017. This was due to a have greater food availability, small-scale invest-
25.2% increase in the export of copper and higher ments have increased and the school feeding
copper prices. NTEs are divided into agricultural programme has increased its support and has
and non-agricultural products. Major export com- contributed to improving school attendance and
modities of agricultural products include maize, retention of learners. In terms of primary educa-
tobacco and maize seed. Agricultural products tion, access has been enhanced through new
contributed 29.9% to Zambia’s NTEs, while non- classrooms being built and more teachers being
agricultural commodities contributed 70.1% to the employed. Access to tertiary education and train-
NTEs. Major non-agricultural commodities include ing has also noted improvements, with the focus
cobalt oxides, articles of stone or other mineral on enhancing the quality of training and increasing
substances and sulphuric acid. In October 2017, its relevance to the needs of industry. Existing fa-
the major import products by category were capital cilities have been upgraded, new institutions con-
goods at 30.1%, intermediate goods with 28.5%, structed and lecturers’ qualifications have been
followed by consumer goods with 26.8% and raw improved.
materials with 14.6%.

SOCIO-ECONOMIC DEVELOPMENTS: DEVELOPMENTAL PLANS:

From the early 1990s, the national poverty inci- During the 7NDP’s period, the Government’s poli- “Although there has been
dence was 79%, by 2015 this has been reduced cy stance will remain focused on maintaining price a decrease in the level of
to 54.4% with greater poverty levels in rural areas and financial system stability. In addition, the Gov- poverty, the Gini coefficient
as most economic growth is concentrated around ernment will remain focused on sustaining single- measurement of income in-
urban areas and major industries are not labour digit inflation levels and a stable exchange rate to equality has increased over
intensive. Economic growth has not had a signifi- enhance economic competitiveness, which will be the last decade.”
cant impact on reducing poverty levels, which is critical in supporting growth.
due to low employment creation. Formal employ- The 7NDP’s macroeconomic framework is a para-
ment has been sluggish with the majority (around digm shift from a sectoral to an integrated (multi-
80%) of the population employed in the informal sectoral) development approach, which takes into
sector. Although there has been a decrease in the account the country’s regional comparative advan-
level of poverty, the Gini coefficient measurement tage and aims to deal with the impact of slow and
30 ECONOMY ANALYSIS

fragile global economic growth prospects, domes- • Improve infrastructure development in the
tic challenges and the effects of climate change. transport and energy sectors, with an empha-
The 7NDP’s macroeconomic framework also aims sis on increased private sector participation.
at achieving economic transformation for liveli-
hood improvement and creation of decent, gain- With economic growth projected to be above 5%,
ful and productive employment, especially for the the Plan’s economic growth strategies include:
youth. A stable and predictable policy environment
“Positive and sustained for macroeconomic stability, which will increase • Policy interventions related to in-
growth, and fiscal consoli- investor confidence and help build a resilient and creased investments in sectors poised for
dation is needed to support diversified economy, will underpin this. For price growth(agriculture, energy, manufacturing
macroeconomic stability and financial market stability, maintenance of a and tourism), which will be supported by min-
and improve the country’s favourable monetary policy environment will be ing and public infrastructure development in
competitiveness..” central in sustaining single-digit inflation, a stable transport and communication, especially in
market and a competitive exchange rate. Positive the rural areas;
and sustained growth, and fiscal consolidation is • Sustained investment in education and
needed to support macroeconomic stability and health, and continuous improvements in ser-
improve the country’s competitiveness. vice delivery;
The macroeconomic objectives are:
• Attain an average annual real GDP growth Industrialisation strategies to reinforce the eco-
rate of over 5%; nomic growth prospects. These are aimed at
• Maintain single-digit inflation; increasing foreign exchange earnings from ag-
• Increase international reserves to at least riculture, tourism and small-scale mining, which
four months of import cover; would increase the economy’s resilience to exter-
• Raise domestic revenue collections to over nal shocks and dilute the mining sector’s share of
18% of GDP; contributions to foreign exchange earnings. Dur-
• Limit domestic borrowing to below 2% of ing the Plan’s period, fiscal policy will be to ensure
GDP; financial restoration, prudence and sustainability,
• Reduce the budget deficit to below 3%; especially in light of recently experienced chal-
• Create a million productive and gainful job lenges that arose from both domestic and interna-
opportunities, and improving the country’s tional factors. The focus of such policies will be to
competitiveness; restore budget credibility and transparency, while
• Increase the share of earnings from non-min- ensuring policy consistency. Fiscal consolidation
ing exports to about 50%; and of both revenue and expenditure will continue as
 ECONOMY ANALYSIS 31

a means to provide a supportive environment that • Addressing the cost of finance;

unlocks development bottlenecks and stimulates • Putting in place measures to improve credit
growth. In addition, public-private partnerships provision to Micro-, Small- and Medium-sized
will be utilised for resource sharing where viable Enterprises;
economic programmes and projects exist. Crucial • Mitigating risks in key sectors such as agricul-
fiscal activities for this period will include: ture, tourism and mining; and
• Develop a new policy and strategy for finan-
• Resolving the accumulation of high interest cial inclusion that makes financial services
payments on public debt and their risks as- inclusive and affordable to all.
sociated with it by minimising domestic and
foreign borrowing, among other things; Government policy will remain focused on main-
• Re-alignment of infrastructure spending for taining an open economy that has a competitive
budgetary sustainability; and market-driven foreign exchange rate regime,
• Enhance the credibility of the budget through while maintaining the stability of the Kwacha. A di-
strict adherence to budget allocations and versified export base that focuses on non-extrac-
ending the accumulation of arrears; tive sectors (agriculture, forestry and energy) will
• Continuously reform, review and/or better tar- be promoted.
get subsidies in fuel, electricity and agricul-
ture; IN CONCLUSION:
• Develop robust funding systems so that rev- Above and beyond the statistics mentioned and
enue collection entities have adequate fund- the trends thereof, Zambia is a figurative gold
ing by introducing fiscal registers and the mine in terms of resources and opportunities for
strengthening of tax administration, which in- good returns on investments, the Government
cludes the increased interaction between and policies are investor friendly and improved upon
among revenue collection agencies; and when need be. The ease of doing business is a
• The strengthening and roll out of collection continuous activity of improvement too. The coun-
mechanisms. In terms of the monetary and try’s long-term vision is universally accepted and
financial sectors, the focus is on maintaining is directed by medium-term plans aimed at achiev-
price and financial system stability, maintain- ing the vision. However, as much as policies and
ing a single-digit inflation level and a stable stats, and their trends, can explain a situation, it
exchange rate. Policy will be focused on en- should be remembered that these figures do not
suring stability in the bank and non-bank sec- run an economy; people do! The people of Zam-
tors; this includes increased access to finan- bia are friendly and easy to work with. They are
cial services that support economic growth. humble, genuine, willing and hard workers; eager
Other points of focus in these sectors are: for both personal and national development. They
are passionate; the kind of people that you would
want on your team. Invest in Zambia, invest in the
Heart of Africa!
32 ECONOMY ANALYSIS
 ECONOMY INTERVIEW 33

A Very Attractive Business Environment

Hon. Margaret Mwanakatwe - Minister of Commerce Trade Industry

BRIG: How is Zambia positioning itself as an at- BRIG: How has the regulatory framework facili-
tractive investment destination and distinguishing tated increased levels of FDI?
itself from the regional competition?

The Government of the Republic of Zambia has Government is keen on enhancing private-sector
continued to create investment and economic pol- led growth and has been working on creating an
icies aimed specifically at establishing an enabling enabling environment for business, as evidenced
investment climate to attract Foreign Direct In- by the enactment of the Business Regulatory Act
vestment (FDI). Government has also put in place of 2014 that was meant to create a cost effective
policies that have made the country attractive for and business regulation framework in Zambia.
investment due to it’s political stability. Because of our business environment reforms,
It is a well-known fact that Zambia is endowed Zambia is now ranked 8th in SADC and 4th in
with natural resources which can provide an im- COMESA in terms of the ease of doing business.
petus to economic development. Therefore, while Furthermore, Zambia is ranked the 8th most com-
mining still remains important and will continue to petitive country in Africa on the Global Competi-
be promoted, there is a need to aggressively di- tiveness Index. Recently, Zambia was ranked 7th
versify the economy to other sectors in order to by Forbes as the best country for doing business
cushion the economy against the negative effects among 54 African countries.
of external shocks. Government is working to make further improve-
Zambia’s economy has been growing at an aver- ments to the regulatory environment – particularly
age rate of around 6.3% over the last ten years in areas such as commercial licencing, enforc-
and the country has seen steady growth in sec- ing contract, registering property and resolving
tors such as mining, agriculture, construction, solvency. The new Business Regulatory Review
transportation, as well as information technology. Agency should go a long way towards alleviating
The economy has also seen greater involvement current bottlenecks and reducing business costs.
of the private individuals and private companies’
involvement in all sectors. Government has pro-
vided attractive incentive packages to all those
investors who wish to invest in our priority sectors.
34 ECONOMY INTERVIEW

BRIG: How can Zambia further benefit from re- BRIG: What role does increased investment in in-
gional integration? frastructure play in developing the economy?

Regional integration and economic cooperation There is need to close the infrastructure gap in
remain crucial to unlocking diversified growth. Zambia as it is a hindrance to industrialization. In-
Zambia is part of the free trade areas of both the vestments in research and development focused
Common Market for Eastern and Southern Africa on driving industrialization, modern services and
(COMESA) and the Southern African Develop- structural information, and investments in physical
ment Community (SADC), which bestow duty- and virtual infrastructure such as road, railways,
free access to strategic markets across the con- ports, ICTs and energy are all critical in closing the
tinent. Expanded access to regional, as well as competitiveness gap of African firms. Just as there
global markets, has seen a substantial expansion is no industrialization without infrastructure, one
in trade in the past decade. The country has also cannot trade efficiently and effectively without in-
become part of the new Tripartite Free Trade Area frastructure. Without infrastructure development,
(TFTA) between COMESA, SADC and the EAC; job creation and nation-wide industrialization will
an agreement that is projected to bring Zambia a remain elusive and this is a position Government
net benefit of $149.9m annually, not counting the will not accept.
proceeds from new investment opportunities into
priority areas for diversification, value addition
and innovation. The Zambian Government has on
many occasions called for the strengthening of the
investment and economic partnerships between
African countries to contribute to the growth and
development of each economy and the continent.
this also places a lot of importance on fostering
joint venture partnerships between local and for-
eign-owned companies.
 ECONOMY ARTICLE 35

Statement on the Economy and Engagement with IMF

Hon. Felix Mutati – Minister of Finance

Economic performance has rebounded with in- bility of the currency is on account of an improved
flation down to single digits, the exchange rate supply of foreign exchange, better outlook for cop-
remaining largely stable, while GDP growth has per prices and positive market sentiment. In the
started recovering. external sector, the country’s current account defi-
cit narrowed to $257.1m in the first quarter of 2017
GDP GROWTH: from a deficit of $574.7m in the fourth quarter of
Growth in 2017 is projected to rise to 4.3% against 2016. This was largely explained by an improve-
an initial forecast of 3.4%. This is as a result of in- ment in the trade and primary income balances.
creased agricultural output, recovering generation
of electricity and higher mining output, supported FOREIGN RESERVES:
by better prices and power supply. Other sec- As at end of May 2017, foreign reserves stood at
tors that are supporting growth are construction, $2.4bn, which translated to around 3.3 months of
wholesale and trade and tourism sectors. import cover. The Government’s goal is to attain
4 months of import cover over the medium-term.

INFLATION: LENDING RATES:

Inflation closed at the end of 2016 at 7.5% and re- Lending rates are still very high for sustainable
duced further to 6.5% in May 2017. This was sup- economic growth. In the first five months of 2017,
ported by the continued stability of the exchange the rates averaged 28%, a level that limits lending
rate, lower food prices in view of a good harvest to the private sector. This rate is slightly below the
and improved market confidence in the country’s 29% average rate recorded at the end of 2016. In
policy direction. Inflation is projected to remain in an effort to lower the cost of credit and increase
single digits in 2017. lending to the private sector, the Bank of Zambia
eased monetary policy. Both the policy rate and
EXCHANGE RATE AND EXTERNAL SECTOR statutory reserve ratio were reduced to 12.5%
DEVELOPMENTS: from 15.5%, and from 18.0%, respectively. These
The exchange rate of the Kwacha against major measures will be complimented by Government’s
currencies has remained stable, with a bias to- fiscal restraint. The Banking community is urged
wards an appreciation. The Kwacha appreciated to reciprocate and pass on cheaper credit to the
against the US dollar to an average of K9.34 in market.
May 2017 from K9.92 in December 2016. The sta-
36 ECONOMY ARTICLE

FISCAL PERFORMANCE: STOCK OF GOVERNMENT ARREARS:

Fiscal performance in the first five months of 2017 As at end of March, 2017, the stock of domestic
was challenging. Revenues under-performed arrears was K17.35bn. In 2017 alone, the Govern-
by 10% compared to the budget. The underper- ment has paid out a total of K4.3bn towards the
formance in revenues has been on account of clearance of arrears. To address the arrears situ-
low tax compliance by taxpayers, and delayed ation in a sustainable manner, Government has
implementation of budget measures such as land designed a time-specific arrears-dismantling strat-
titling, installation of electronic fiscal devices to egy. The strategy also includes measures that will
improve VAT collections, implementation of elec- stop accumulation of new arrears.
tronic equipment in the communications sector to
improve the performance of excise duty and the STRUCTURAL REFORMS:
introduction of a single window at entry points to The Government will continue to implement struc-
reduce turnaround times at borders and boost tural reforms aimed at strengthening public finance
revenue. To contribute to resolving the challenge management to support fiscal prudence and ad-
of low revenue collections, we are enhancing tax dress other structural challenges to stimulate in-
compliance efforts, coupled with getting additional clusive growth. These include: 1. The full roll-out
resources through the tax amnesty. Further, we of the Integrated Financial Management Informa-
must all play our part by ensuring that we meet our tion System (IFMIS) and full implementation of
tax obligations. Failure to do so will attract puni- the Treasury Single Account (TSA) by the end of
tive measures. Following the lower than projected 2017. 2. Full implementation of the e-voucher sys-
revenues during the first five months of 2017, the tem under the Farmer Input Support Programme
Government, will reduce and realign expenditures (FISP). 3. Revision of a number of laws includ-
to meet its deficit target and fiscal consolidation ing the Public Finance Act, a new Zambia Public
objective. The Government will also hasten the Procurement Bill, review of the Loans and Guar-
implementation of the 2017 budget measures. antees (Authorization) Act and introduction of the
Planning and Budgeting Bill to Parliament.
EXTERNAL AND DOMESTIC DEBT
PERFORMANCE: THE MEDIUM-TERM OUTLOOK:
Zambia’s external debt stock as at end ofMay 2017 As outlined in the Seventh National Development
increased to $7.2bn from $6.9bn in December, Plan, growth over the medium-term is forecast to
2016. The increase in the stock was on account of rise to at least 5.0%. Growth will be mainly driv-
new disbursements. The domestic debt stock was en by the agricultural, energy, mining, construc-
K38.6bn in May 2017 compared to K33bn in De- tion and manufacturing sectors. The exchange
cember 2016. The rise is explained by increased rate stability will be sustained while inflation is
demand for Government paper. In order to ensure projected to be within the target range of 6-8%.
continued debt sustainability, Government has Regarding the fiscal position, the Government will
finalized a Medium Term Debt Strategy that pro- work towards fiscal sustainability and consolida-
vides a framework for prudent debt management. tion. This will create room for lending to the private
Further, regular debt sustainability analysis will be sector, and stimulate increased economic activi-
the guiding principle for future borrowing activities. ties. Overall, pressure on the external sector was
 ECONOMY ARTICLE 37

expected to continue in 2017 mainly attributed to from 29th May to 10th June, 2017. During these
the slow pick up in export earnings. However, the meetings, the Government and the Fund agreed
external sector is expected to rebound through the on remaining actions needed to reach staff-level
medium-term, largely driven by the expected in- agreement on a programme that could be sup-
crease in copper and non-traditional export earn- ported under the IMF’s Extended Credit Facility.
ings. Copper export earnings will mainly rebound When the agreed required actions are implement-
on account of increased production while growth ed. The major issues required to be addressed for
in non-traditional export earnings will be support- us to proceed to conclusion mainly relate to higher
ed by Government’s diversification measures. than projected budget deficits, accumulation of
arrears and an increase in debt levels. The key
GOVERNMENT’S ENGAGEMENT WITH THE policy and structural measures aimed at mitigating
IMF: these challenges, including reforms in energy and
The country has made tremendous social and agriculture were highlighted previously. Further,
economic progress. However, risks remain on the recognizing that the reforms might have adverse
external side. Based on the need to support the effects on vulnerable members of society, Gov-
external sector, increase market confidence, en- ernment will scale up the social protection pro-
hance investment flows and leveraging more re- grammes. In addition to increased resources that
sources from cooperating partners, Government Government has committed for the programme,
has engaged the IMF on a possible programme. our cooperating partners have also augmented
In this regard, we hosted the IMF in discussions resources for social protection.
38 ECONOMY ARTICLE

A Closer Look at Kasumbalesa Border

Ministry of Finance Statement

Kasumbalesa, between the Democratic Republic bia’s BankABC, while the balance was injected as
of Congo (DRC) and Zambia, is the busiest transit a shareholders’ loan.
border in Zambia and handles an average of 650
trucks per day. Under the 20-year concession agreement, the
Concessionaire has been permitted by the Zam-
Through Kasumbalesa, Zambia’s main exports bian Government to collect border/terminal cross-
to the DRC are sugar, cement, timber, mattress- ing fees to the level of $100 per truck. ZipBCC
es, acid, mealie-meal, agricultural products, and initially operated the concession from March 2011
cooking oil, among others. to October 2012. The Zambian Government,
through ZRA, then operated the concession until
On the other hand, Zambia mainly imports min- December 2015, when the concession was offi-
eral ores and concentrates from the DRC. The cially handed back to ZipBCC.
imports are destined for Konkola Copper Mines,
and Chambishi Copper Smelter in the Copperbelt The system ZipBCC has installed at Kasumbalesa
Province. facilitates speedy movement of people and goods
through an ultra-modern electronic traffic man-
The Minister of Finance Felix Mutati recently agement system. For the period January to Octo-
toured Kasumbalesa Border for an on-the-spot ber, 2017, the total number of trucks coming into
inspection of revenue enhancement prospects Zambia and crossing the Kasumbalesa border in-
available at the location and to appreciate the creased by 13% to 81,055 from 71,933 during the
operational challenges being faced by Zambian same period in 2016.
government agencies in their quest to optimize
performance. On the other hand, the total number of trucks exit-
ing Zambia and crossing the Kasumbalesa border
Kasumbalesa is the only border in Zambia collects increased by 18% to 82,943 compared to 70,098
border/terminal crossing fees. The arrangement is in the same period in 2016.
under a Public-Private Partnership (PPP) Agree-
ment between the Government of the Republic of Flow of traffic influences the collection of border/
Zambia and the Zambia Integrated Property Bor- terminal crossing fees. For the period up to Octo-
der Crossing Company (ZipBCC). ber, 2017, $16.8m was collected as border/termi-
nal crossing fees, compared to only $14.4m dur-
On inception, the total investment by ZipBCC in ing the same period in 2016; thereby, representing
border infrastructure was approximately $33m, performance improvement of 16.8% from 2016 to
of which $20m was raised from the Development 2017.
Bank of Southern Africa (DBSA), $5m from Zam-
 ECONOMY ARTICLE 39

From 2015, ZipBCC has invested a further $4m for due to smuggling. This situation has made
in rehabilitation and improvements works to allow the location look disorganized, thereby affecting
the smooth flow of traffic between the two coun- the flow of motor vehicles and creating an atmos-
tries. phere for facilitation of smuggling.

Clearly, border traffic flow has an exponential ef- As stated in the 2017 Budget Address, Zambia is
fect on the revenue performance of Zambian gov- making efforts to prioritize international trade as
ernment agencies operating at the border and col- a tool for attaining inclusive growth and develop-
lecting either tax or non-tax revenue. ment.

As a result of improved operational efficiency, In this regard, efforts are underway to operational-
the importation of copper ores and concentrates ise the Bilateral Trade Agreement with the Demo-
through Kasumbalesa has now resulted in an up- cratic Republic of the Congo and establish trade
swing in total revenue collection, with Value Add- centres for our major non-traditional export mar-
ed Tax (VAT) accounting for more than 96%. kets beginning with Kasumbalesa, Kipushi and
Chirundu borders.
Kasumbalesa has surpassed the 2017 revenue
target by over K14m, collecting K342m as at 31st Going forward, the One Stop Border Concept is
October 2017 against the annual target of K328m. an important trade facilitation tool that will help
The collection was boosted by an increase in to improve the flow of traffic across the border.
both small-scale trading and commercial consign- Progressively, Zambia and the DRC have already
ments. signed an agreement to implement the One Stop
Border Post (OSBP) concept at Kasumbalesa.
At the moment, Kasumbalesa experiences inci-
dences of smuggling into the DRC from Zambia. Kasumbalesa is a low hanging fruit for enhance-
Among other challenges, the close proximity of ment of both tax and non-tax revenue collection
Zambia’s Bilanga market to the border, has been for Zambia.
identified as a contributing factor to smuggling. At
Kasumbalesa, the majority of traders are Congo-
lese who cross into Zambia to buy food stuffs and
sometimes sell merchandise.

In as much as Zambia is benefiting from the buy-

ing power of the Congolese, trade happens hap-
hazardly and transactions are poorly accounted
40 ECONOMY ARTICLE

National Financial Inclusion Strategy

Ministry of Finance Statement

This National Financial Inclusion Strategy (NFIS) constrain their ability and willingness to use for-
is a renewed commitment to financial inclusion in mal financial products and services to meet their
Zambia and builds on previous efforts and ongo- goals.
ing initiatives by Government. The vision for fi- • To address these gaps, this NFIS sets forth
nancial inclusion in Zambia is to have universal a coordinated and sequenced set of actions
access to and usage of a broad range of quality to be executed by the public and private sec-
and affordable financial products and services. In tors. The successful implementation of these
achieving this vision, it is expected that all Zambi- actions will achieve the following:
ans will reap the full benefits of financial inclusion: • An overall increase in financial inclusion (for-
that is, individuals will be able to use appropriate mal and informal) from 59% to 80% and an in-
savings, credit, payment, insurance, and invest- crease in formal financial inclusion from 38%
ment services to manage risks, plan for the future, to 70% by 2022;
and achieve their goals, and firms will be able to • Improved physical access to high-quality fi-
access affordable financing to facilitate innovation nancial delivery channels, including branch-
and firm growth and create employment. es, agents, and automated teller machines
Despite recent progress on financial inclusion (ATMs), such that the number of financial
whereby 4.8m (59.3% of the adult population) access points per 10,000 adults will increase
were financially included as of 2015, much re- from approximately 7 to 10 by 2022;
mains to be done to achieve this vision. More • Innovative and diverse financial products and
than 3.5m Zambian adults (approximately 41% services that meet customers’ needs lead-
of the adult population) are financially excluded ing to the percentage of adults with at least
and more than 5m Zambian adults (approximately a transaction account growing from 36% to
60% of the adult population) do not use financial 70% by 2022;
products and services from regulated providers. • Improved outreach and adoption of digital fi-
In addition, significant disparities in financial in- nancial services;
clusion remain between rural and urban areas, • Greater availability of affordable financing
men and women, youth and adults, and small and for SMEs, smallholder farmers, and agricul-
medium enterprises (SMEs) and large firms. The tural entities, thereby reducing the number of
potential to leverage digital technologies to reduce SMEs reporting access to finance as a major
costs and expand the reach of the formal financial constraint from 27% to 20% by 2022; and
sector has not yet been fully exploited. • Enhanced consumer protection and in-
Non-bank financial institutions such as insurance creased financial capabilities of consumers,
companies, pension providers, and microfinance resulting in an increase in the percentage of
institutions have limited outreach. Low levels of adults with high financial product awareness
financial capabilities among some consumers and levels from 36% to 50% by 2022.
limited consumer protection mechanisms also
 ECONOMY ARTICLE 41

The NFIS Framework (Figure 1) outlines the key • Issue agency and mobile banking regula-
components required to achieve the NFIS vision. tions;
The Framework is built on three key enablers: • Design, test, and launch simplified and tai-
(i) Public and Private Sector Commitment and lored products for unserved and underserved
Coordination; (ii) Policy, Legal, and Regulatory consumers, including via mobile-based chan-
Environment and Supervisory Capacity; and (iii) nels;
Financial Infrastructure. Strengthening these ena- • Review and finalise the Credit Reporting Bill;
blers will provide the foundation for a healthy and • Promote utilisation of the Movable Property
inclusive financial sector. The Framework also Security Interest Register to increase asset-
outlines four key drivers: (i) Widespread and Ac- based lending, especially to SMEs; and
cessible Delivery Channels; (ii) Diverse, Innova- • Build capacity of regulators to undertake fi-
tive, and Customer-Centric Products; (iii) Finance nancial consumer protection supervision.
for SME Growth; and (iv) Financial Consumer The implementation of this NFIS will be guided by
Protection and Capability. a coordination structure that leverages expertise
This NFIS contains a detailed action plan with a and resources from the public and private sectors.
broad range of 50+ targeted and sequenced ac- Measurement of progress toward the NFIS vision
tions reflecting the enablers and drivers in the and objectives will be supported by a robust moni-
NFIS framework. The achievement of these ac- toring and evaluation system, which includes a
tions is expected to result in the attainment of the range of national-level and action-level key perfor-
previously listed strategy objectives and targets. mance indicators and targets, in addition to those
Actions that are considered to be “high priority, previously listed. Implementation of this strategy
high impact” include the following: will complement other financial sector initiatives,
• Migrate government-to-person and person- including the pursuit of financial stability and finan-
to-government payments to digital platforms; cial integrity.
42 ECONOMY INTERVIEW

A High Margin Potential

Jason Kazilimani, Managing Director, KPMG

BRIG: What three signs best exemplify your opti-

mism for the Zambian economy?

Jason Kazilimani:
Zambia has recently seen improved electricity Zambia’s agricultural potential is slowly being
generation, with Government introducing more tapped with investments in cotton, maize, soya,
cost-reflective tariffs. The inflation rate has stabi- and tobacco growing steadily. We can expect FDI
lized, down to 7% from over 20% in 2015. in agriculture to rise sharply.

The local currency, the Zambian Kwacha is strong I would define Zambia as a high-cost environ-
and the Bank of Zambia eased liquidity require- ment, but with potentially very high margins.
ments for banks, enabling them to lend more.
BRIG: What are the main challenges an investor
There has been a definite focus on the generation encounters in Zambia?
of electricity, which will consequently encourage
manufacturing and mining activities. Some of the Jason Kazilimani:
efforts are already bearing fruit. As an example, in Multiple challenges to doing business persist. The
2016, Maamba Collieries, a local coal producer, cost of borrowing is still high, with prevailing inter-
added value by producing 300 MW of thermal est rates at around 30%. These high real-lending
power from which the majority is sold to the na- rates continue to limit access to credit by the vi-
tional grid. Also, Dangote Cement recently set up able sectors of the economy and reflect a continu-
a cement plant in Ndola with an in-house electric- ous contraction of credit to the private sector due
ity generation plant and ZCCM-IH made a multi- to the banks’ preference for government securities
million dollar investment in another cement plant and prohibitive collateral requirements. The Bank
in The Copperbelt. of Zambia, however, has reduced the interbank
lending rate from 14% to 12.5% recently in a bid
There has been a strong focus on infrastructure to reduce interest rates.
development with the Government’s investment in
road construction enabling the country to improve Regarding ICTs, Zambia, unfortunately, has a
transport linkages with neighbouring countries. concentration of information technologies in Lu-
The agriculture sector, as one of Zambia’s priority saka and on the line of rail, so internet connection
areas is on a definite path of further development is at times not available or is limited.
with value addition and industrialization efforts.
 ECONOMY INTERVIEW 43

BRIG: What should international investors know

when looking to expand their portfolio in Zambia?

Jason Kazilimani:
The tax framework is satisfactory. There is room The local tax regime is one of the areas where the
for improvement with some regulations and tax international investor should educate themselves.
incentives clarified. The problem in Zambia is the Engaging a professional services firm is highly
relatively small size of the formal sector, which is recommended. Occasionally, when a business re-
heavily taxed and the enormous informal sector quires Cabinet approval, things take some time.
which is not taxed, and so the tax burden falls on Relatively recently however, the administration in-
few. Lower tax rates would encourage the infor- troduced e-services at ZRA, NAPSA, and PACRA,
mal sector to register their operations and more which has improved the speed and quality of do-
people would be given a chance to participate in ing business. Quicker Government approvals are
the economy. Government procurement should needed, especially in issuing business licenses.
involve SMEs, promoting a more inclusive busi-
ness environment accordingly. On the other hand, Zambia has very attractive in-
vestment incentives, there are no exchange con-
Zambia should reduce corporate taxation for ex- trols, and the country is politically and economi-
porters as a lower tax rate for local manufactur- cally stable, relatively speaking. Our population is
ers would free up more capital to reinvest in their young, educated and sophisticated, with a strong
growth. entrepreneurial gene and we have an abundance
of land and water resources.
44 ECONOMY ARTICLE

How Fiscal Policy has Shaped the Zambian Economy

By Shebo Nalishebo, Research Fellow, ZIPAR

Until recently, Zambia was a poster child for eco- Government’s policies extended to spending
nomic growth in sub-Saharan Africa. Following overruns in costly and poorly targeted agriculture
the privatisation of the copper mines in the early and fuel subsidies. They soared from 21% of 2015
2000s, the rebound in copper prices and associ- domestic revenues to nearly 30% of 2016 domes-
ated massive investments contributed to the in- tic revenues.
crease in copper output from 260,000 tons at the With revenues generally being lower than pro-
turn of the century to 771,000 tons in 2016. jected, due in part to the drop in revenues from
The country’s debt reduced significantly following copper proceeds as a result of a drop in prices,
debt forgiveness when it reached the Highly In- mainly due to reduced demand from China, and
debted Poor Countries (HIPC) Completion Point inconsistencies in the mining tax regime, the fiscal
in 2005, creating some fiscal space. Between deficits mounted and averaged 7% of GDP during
2006 and 2012, the economy grew at an annual the last five years.
average of over 6% per annum. The country was
reclassified to a lower-middle income country by
the World Bank and etched its name in the ‘Africa To finance the deficit, Government relied heav-
Rising’ narrative and was considered part of the ily on external sources and therefore issued the
10 African Lions (the fastest growing economies second Eurobond in 2014 worth $1bn at a coupon
at the time, which were set to outrun the growth rate of 8.5% and the third in 2015 amounting to
rates of the Asian Tigers. $1.25bn at an even higher coupon rate of 8.97%.
Faced with a huge infrastructure deficit, Zambia Due to the three Eurobonds, the stock of commer-
used its newly found economic exuberance to cial external debt, and the accompanying interest
take advantage of international investors looking payments, rose sharply.
for high yields in frontier and emerging markets,
and, in 2012, jumped onto the bandwagon of oth-
er African countries who issued Eurobonds. The However, the funds raised on the international
debut $750m Eurobond was to be used mainly to markets did little to stem Government’s liquid-
finance road construction and rehabilitation. A sig- ity problems and fiscal and external imbalances.
nificant portion was also allocated to the electricity Despite the uncertainty with regards to global fi-
utility firm ZESCO to develop electricity infrastruc- nancial markets and the high refinancing risks
ture and the recapitalisation of struggling railway associated with the Eurobonds, no appropriate
firm Zambia Railways. These were considered contingency plans to service the Eurobonds at
projects of high economic return, which would pay maturity were instituted.
back the loan in the immediate future. In order to Soon after the issuing of the third Eurobond, the
fulfil the 2011 election pledges of “putting more age-old problem of electricity supply constraints
money in your pockets”, Government effected a came to a head following a partial drought in
higher than projected wage award to public sector 2015. With hydropower accounting for 98% of the
workers in 2013. country’s total electricity output, the deteriorating
Therefore, the wage bill, which was 6.5% of GDP energy situation contributed to severely reduced
in 2011, escalated to 9.4% of GDP in 2014. In output and productivity in the nation’s manufactur-
terms of revenue, it increased from less than 38% ing factories and other businesses and increased
of domestic revenues in 2011 to nearly 52% in costs as firms and households had to find alterna-
2014. Oblivious to the effect of these spending tive strategies to cope with the crisis. Faced with
overruns, allocations to infrastructure, particularly an increasing debt burden and a huge wage bill,
road projects, remained a sacred cow and contin- non-discretionary expenditure now accounted for
ued to increase. over 75% of domestic revenue, leaving very little
 ECONOMY ARTICLE 45

for growth sectors and programmes. nominal GDP, which stood at $27.2bn in 2014,
These and other factors shaped the performance reduced to $21.2bn in 2015. Zambia has since
of the Zambian economy leading to slow eco- made some modest economic recovery with GDP
nomic growth which hit a trough of 2.9% in 2015, growth posting 3.6% in 2016 and is expected to
the slowest growth since the 1990s. About $6bn end 2017 at 3.4%.
was wiped off from the nominal GDP in 2015 when
46 ECONOMY ARTICLE

A Pro-Business Approach
The Investment Vehicle of the Zambian Government

When addressing a United Nations General As- tier investor focused on a wide variety of sectors
sembly event on Africa’s industrialization, the including agriculture, forestry, manufacturing, fi-
President Edgar Chagwa Lungu stressed the im- nancial services, mining, energy, telecommunica-
portant role that industrialisation plays in emerging tions, logistics, medical, education, tourism, real
markets to achieve socially-inclusive and environ- estate, and media, and holds shares in more than
mentally-sound sustainable economic growth. “It 30 companies/parastatals.
is, therefore, an inevitable solution to bring about
the much-needed structural economic transforma- Bullish on Zambia’s economic growth prospects,
tion. Industrialization-induced structural economic the IDC has led the way by launching the first
transformation will enable our countries to diver- large-scale renewable energy project which is
sify their economies, raise productivity, create bet- expected not only contribute immensely to the
ter jobs and increase their competitiveness in the national power generation by adding 600 MW to
global market.” the national grid, but also support various other
industries by creating a conducive manufacturing
The Industrial Development Corporation of Zam- environment. The first phase of the project saw
bia was created in early 2014 and is an invest- the Italian-based Enel Green Power Limited and
ment company owned by the Ministry of Finance Neoen First Solar of France win the bid to con-
of Zambia and was established to lead the devel- struct two separate solar plants at the Lusaka
opment of Zambia’s domestic industrial capacity South Multi-Facility Economic Zone. During the
and job creation. second phase of the solar project, 12 international
companies have already been shortlisted to com-
The IDC plays its role through evaluation, pricing pete for the $300m project to equip Zambia with
and lowering the investment risk profile by serv- additional 300 MW.
ing as co-investor alongside private-sector inves-
tors ,and ultimately creating a conducive business The enabling business model of the Industrial
environment for the private sector. Created as a Development Corporation has already attracted
government investment vehicle, the IDC is a very various international partners. Rabobank of the
unique institution – a government entity that is Netherlands owns 49% of shares of the Zambia
structured like a private company. The corpora- National Commercial Bank, commonly referred to
tion, as per its modus operandi, tends to be an as ZANACO, where IDC is the majority stakehold-
effective solution to the oftentimes unstable busi- er. Indo- Zambia Bank is another financial com-
ness climate in Africa ensures that foreign part- pany under the IDC umbrella, a joint venture be-
ners can team up with a government entity that tween the Government of the Republic of Zambia
has easy and quick access to the policy makers of and the Government of India represented through
the country for a safe and guaranteed investment. its three large public-sector banks: Bank of India,
Bank of Baroda & Central Bank of India each
The IDC facilitates provision and raising of long contributing 20% share capital with the remaining
-term finance for various government initiated pro- 40% owned by the IDC.
jects and also serves as an investment holding
company for State-Owned Enterprises and new As per the presidential vision, all state-owned en-
investments that ultimately generate earnings for terprises must list on the Lusaka Securities Ex-
the proposed Zambia Sovereign Wealth Fund. change within the next five to ten years to eco-
Today, the IDC is an active shareholder and fron- nomically empower Zambians and encourage
 ECONOMY ARTICLE 47

them to participate in the stock market. The In- business and political environment. Since 2011,
dustrial Development Corporation is seeking to be the political administration has embarked on the
an important tool in achieving this ambitious goal largest infrastructure development programme
by, first, making these entities profitable, attracting since independence and wants to establish Zam-
the needed investment, and giving the citizens an bia as a regional trade hub and a launch pad for
opportunity to own these companies by purchas- businesses into other neighbouring countries ,
ing shares. comprise an attractive mass market of 600 mil-
lion people. Developing exports has become a
The current government of Zambia is extremely strategic national interest and the manufacturing
business savvy and seems to be able to demon- businesses establishing their operations in the
strate to an increasing number of international ac- centrally-located SADC country only confirms the
tors that Zambia is an attractive investment des- fact that Zambia is good for business.
tination with a resilient economy and a low-risk
48

Ten Reasons to Invest in Zambia

1. Political stability, peace and democracy

2. Adherency to rule of law, positive and investor-friendly environment

3. Investment guarantees and security

4. Abundant natural resources presenting excellent investment and trade opportunities

5. Private sector driven Government Economic Development policies in place

6. Attractive investment incentives

7. No exchange controls and repatriation of 100% of profits since 1994

8. Duty free access to regional, wider Africa, EU and USA Market.

9. Progressive banking, legal and insurance Ssrvices of international standards

10. Good place to work and live, friendly people with a rich and vibrant culture
50

Abalya imbulu, balapalamana. (Bemba)

Those who eat water monitors are found close to each other.
People with common interests always interact. Birds of a
feather flock together.
BANKING
Vast regulatory changes in line with international best practices

Recent reduction in inter-bank lending rates

Sector shows strong resilience during economic challenges

Rise in mobile payment systems

52 BANKING ANALYSIS

Funding Development
You can bank on us.
BACKGROUND:
When Zambia’s economy was liberalised in the early satisfactory. This has been attributed to the country’s eco-
1990s, the banking sector’s growth accelerated with new nomic diversification with developments in the agriculture,
entrants, from around five to the present 19 commercial transport and communication, manufacturing and forestry
banks as well as a large number of Non-Bank Financial sectors, among others, as major contributors to the stabil-
Institutions (NBFI). Zambia’s central bank, the Bank of ity of the financial sector.
Zambia (BoZ) oversees the banking sector and reports In 2012, the Government increased the minimum capi-
to the Ministry of Finance; the Banking and Financial tal requirement that banks must have on hand. This was
Services Act of 2017 governs the sector. The sector has undertaken to strengthen the balance sheets of commer-
undergone vast regulatory changes to remain up to date cial banks in supporting Zambia’s growing economy. The
with international best practices. BoZ has been credited minimum capital requirement for local banks is K104bn
with the major improvements seen in bank oversight in and K520bn for foreign banks. Prior to this, the minimum
the recent past. capital requirement for all banks was at K12bn. It is ar-
The 19 commercial banks are comprised of both inter- gued that these new capital requirements are expected to
national and local banks. By law, all banks that operate in boost the banks’ lending to the private sector. It appears
the country need to be incorporated locally, hence there that the banks seem to be adequately capitalized. With
are no branches of foreign financial institutions, only sub- the recent reduction of interest rates, growth in the sec-
sidiaries. The composition of Non-Bank Financial Institu- tor has resumed. Partnerships and syndicated lending
tions (NBFI) is composed of 76 bureaux de changes, 36 between financial service providers are growing, this is
microfinance institutions, 1 savings and credit institution, 7 whereby institutions form joint ventures in funding large
leasing and finance companies, 1 development finance projects. Microfinance is viewed as a sub-sector that is
institution (the Development Bank of Zambia), 1 credit ref- undergoing significant growth. There is a large number of
erence bureaux and 3 building societies. microfinance service providers and greater regulation is
The sector has a high rate of competition and, as such, needed here, especially in limiting default.
their product offerings have expanded to better satisfy
consumer needs and their operations have spread over TOTAL ASSETS AND LIABILITIES:
the different sub-sectors (e.g. banking, capital markets, The total assets of the commercial banks have seen a
insurance, etc.). However, each sub-sector has their own steady growth path over the last 10 years. The loans and
regulator and as a result, the regulatory environment is advancements were K5.7bn in December 2007, rising to
somewhat fragmented. K10bn in May 2011 and K20bn by April 2014. It had a
The Bankers Association of Zambia (BAZ) stated that peak of K27.3bn in November 2015, which has since de-
the commercial banking industry’s overall financial per- creased and resumed its stable growth path. As of Sep-
formance and conditions have been stable and satis- tember 2017, the commercial banks’ loans and advance-
factory in terms of profitability, lending and capitalisation ments were K23.5bn. According to the BoZ, personal
levels with the quality of total loans and advances being loans (others) and, agriculture, forestry, fishing and
 BANKING ANALYSIS 53

hunting had the greatest distribution of loans and advanc-

es. The value of these loans and advances’ value and
distribution percentage are displayed below in Table 1.

Table 1: Distribution of loans and advances as of

September 2017 (BoZ)

However, the commercial banks’ total assets in

September 2017 were K67.7bn. At this same time, total
liabilities were just under K58bn and shareholder’s funds
were over K8.8bn; of these funds, over K50bn were total
deposits. The composition of deposits is displayed below
in Figure 1.

Figure 1: Composition of deposits

54 BANKING ANALYSIS

CREDIT EXTENSION: REGULATIONS:

There has been the assertion that the banking sector is The sector is regulated by various laws and regulations,
not doing enough for the development of the economy which are discussed below. The Seventh National Devel-
as the concentration of its investments is in Government opment Plan 2017-2021 (7NDP) has specific reference
securities (considered as a safe investment during trying to monetary and financial sector policies. The Govern-
times) and is providing little capital to the private sector. ment’s policy stance will continue its focus on maintain-
The BAZ has said that contrary to this assertion, the sec- ing price and financial system stability, which includes
tor’s share of investments in the private sector is around an increase in access to financial services as a means
78%, while government securities account for 22% of the to support economic growth. The Government’s priority
funds and that the sector is dedicated in its support for the during the 7NDP’s period is to address the cost of finance
growth of the private sector. It was said that the Govern- and improve credit provision to Micro-, Small and Medi-
ment’s delay in payment to contractors and suppliers was um-sized Enterprises (MSMEs), including the mitigation
contributing to an increase in the private sector’s non-per- of risks. The main critical reform focus in this sector is to
forming loans. Growth in non-performing loans is above harmonise and strengthen various policies and pieces of
industry norms. 69% Demand deposits, 10% Savings legislation that govern the sector. This will include the de-
deposits, 21% Time deposits. velopment of a new policy and strategy on financial inclu-
sion that will drive the agenda of inclusive and affordable
BRANCHES: financial services to all Zambians. In line with this, various
According to the Bank of Zambia, the 19 commercial acts and policies have been updated in 2017. In addition,
banks in Zambia have a total of 420 branches across the the improved access to finance for production and export
country, with Zambia National Commercial Bank Plc hav- is one of the strategies in the Plan’s stimulation of various
ing the most with 68, which was followed by Atlas Mara economic development initiatives. The National Financial
Zambia with 65. One bank had only two branches. The Inclusion Strategy (NFIS) is a renewed commitment to fi-
majority of these branches were in Lusaka and the Cop- nancial inclusion in Zambia and builds on previous efforts
perbelt Province. and ongoing initiatives by Government. The vision for fi-
nancial inclusion in Zambia is to have universal access
USAGE OF PAYMENT SYSTEMS: to and usage of a broad range of quality and affordable
The use of electronic payments has increased substan- financial products and services. In achieving this vision,
tially in the past few years and these types of financial it is expected that all Zambians will reap the full benefits
transactions are being encouraged. This is in the form of of financial inclusion. This includes individuals being able
internet banking and mobile transfers. Mobile transfers to use appropriate savings, credit, payment, insurance
have been identified as a means to decrease the total and investment services to manage their risks, plan for
of the unbanked population. Due to the competitiveness the future and achieve their goals; and firms being able
in the sector, banks have been innovating means to ac- to access affordable financing to facilitate innovation and
cess bank products to gain customers. Agent banking is growth, and create employment.
also on the rise in areas where building a traditional bank The National Financial Sector Development (FSD) Policy
would be unfeasible, an example of such a bank agent of 2017 was developed in order to grow and transform
would be a retail shop. This has helped increase access the financial sector. The Policy is aimed at having a
to banking services as small amounts of money are well-developed and inclusive financial system that sup-
moved; under normal circumstances, people would feel ports efficient resource mobilisation and investment for
intimidated to use the bank with such amounts of money. sustainable economic development. This Policy follows
 BANKING ANALYSIS 55

Zambia’s first and second Financial Sector Development These measures are expected to enhance the resilience
Plans (FSDPs), which ran in two successive five-year of the financial system to internal and external economic
cycles from 2004 to 2009 and from 2010 to 2015. The and financial shocks.
FSDPs represented both a vision and a comprehensive KPMG has unveiled new accounting standards aimed at
strategy by the Government to address weaknesses in providing clarity and transparency in the banking sector.
the Zambian financial system by focusing on five core pil- These new requirements come into effect on January 1,
lars; these were: 2018. Banks will need to develop a plan to ensure that
their systems and processes meet the new standards.
1. Legal reforms and corporate governance; This new standard provides an opportunity to align the
2. Payment systems; management of the business and its reporting. In the
3. Market efficiency and contractual savings; past, the focus was on contractual terms and business
4. Financial education; and intentions when reporting on loans. Data and reporting will
5. Access to finance and financial markets. be the most affected and banks will have to make sig-
nificant changes to ensure that management can track
The Banking and Financial Services Act No 7 of 2017 is information and report within the framework of the new re-
an Act to provide for a licensing system for the conducting quirements. A key change relates to the calculation of im-
of banking or financial business and provision of finan- pairment, which is an accounting principle that describes
cial services; to provide for the incorporation of standards, a permanent reduction in the value of a company’s as-
principles and concepts of corporate governance in in- sets, normally a fixed asset. The calculations require that
stitutional systems and structures of banks and financial management consider and report on future expectations
institutions; to provide for sound business practices and with regards to the performance of the bank’s loan book.
consumer protection mechanisms; to provide for the This change is likely to increase the impairment charges
regulation and supervision of banking and financial ser- in many banks. The standard has also introduced the
vices; to repeal and replace the Banking and Financial requirement to consider impairment of unused facilities,
Services Act,1994; and to provide for matters connected overdrafts, credit cards and government securities based
with, or incidental to, the foregoing. This revised Act has upon expected losses. The new changes in impairments
been undertaken to deal with complex developments in could increase the capital requirement of the banks; al-
the sector, such as the various global bank crises, and in- though this would make the banks safer, it will also affect
corporate Basel III recommendations. The Act has clearly investors’ returns.
defined the consequences of non-adherence by Direc-
tors, Managers and Senior Officials.
In terms of the BoZ Strategic Plan 2016-2019 in the area CONCLUSION:
of financial stability, the oversight of financial service The banking sector has remained resilient during eco-
providers will be through the implementation of Basel III nomic challenges and the upward adjustment of the
Standards, the establishment of an e-deposit protection minimum capital requirement for commercial banks en-
scheme and an e-system for electronic monitoring of bu- countered over the past two years. Banks are continu-
reaux de change transactions. Implementation of the Ba- ally innovating products and means of access to such in
sel III standards is aimed at strengthening capital require- order to gain a greater market share, especially with the
ments and increasing bank liquidity. The BoZ will also unbanked. The sector is stable and regulations are up to
formulate and implement a financial stability framework. date with international best practices.
56 BANKING ANALYSIS
 BANKING ARTICLE 57

Banking in Zambia
A Long Journey of Ups and Downs
By Caesar Cheelo, Senior Researcher, ZIPAR

Banking in Zambia has come a long way since the be easily contained. A number of other commercial
early days of Grindlays Bank, Standard Chartered, banks would also fold before stability was eventually
Barclays and a couple of others that were around restored around the turn of the Century.
at independence. All of those banks were foreign
owned. Over time, banks have come and gone, and In the 21st Century, Zambia’s financial sector re-
the financial landscape has changed greatly. A few mained stable. It modernised quickly, keeping pace
like StanChart and Barclays have stood fast, sticking with modern banking innovations around the global.
around since before 1964. Zambia was a particularly late starter in allowing the
introduction of credit cards onto the market, but is now
For most of the post-independence era, until 1992, slowly catching up with innovations. Various other
commercial banks operated under very constrain- forms of digital banking are also taking root.
ing economic conditions. Before Zambia initiated
the 1992 free-market economic reforms, the state Over the past decade and a half, the banking sec-
controlled everything, including commodity prices, tor has therefore done quite well in serving the 6.6m
foreign exchange trading, the exchange rate, interest people who reside in urban areas. More than 70%
rates, import and export licensing, and a host of other of adults in urban spaces are so-called financially in-
economic and financial aspects. A lucky break came cluded. This is partly because out of every nine peo-
in 1991 with the change of political party in power to ple you come across in urban
the MMD after 27 years of UNIP rule. This is what areas, only two are poor. Most of the country’s per-
ushered in the new thinking that yielded the far-reach sons with formal employment (77%) reside in the
liberalisation, privatisation and public sector reforms urban areas. Urban spaces are also readily serviced
of 1992. Price and exchange controls were eliminated with modern infrastructure (electricity, transportation
and the financial sector was liberalised as was the systems, office accommodation and so on).
rest of the economy.
As such, commercial banking services are concen-
In the post-1992 environment, privatisation became trated in urban areas. Not a single commercial bank in
the order of the day. Even the largest state-owned Zambia is headquartered outside the capital, Lusaka.
bank, Zanaco, founded in 1969, would eventually be
privatized in 2008, with the Government reducing its Because Zambia is a highly dichotomous country with
stake to 49%. Over time, the number of commercial a strong rural-urban divide, so too is the spread of
banks has grown steadily, from 11 in 1992 to 19 in banking services. Among the 9.4m people who inhab-
2017. Other financial institutions – leasing compa- it the rural areas of the country, three out of every four
nies, building societies, micro-finance institutions, people you encounter are poor. Most of them bearly
development banks, financial businesses, bureau de get by, relying on informal, subsistence or small-scale
changes, savings and credit institutions, a Credit Ref- agriculture. The majority do not have electricity, water
erence Bureau and mobile financial services provid- and sanitation services in their homes. They mostly
ers – also set up shop in Zambia. live more than 15 km from the nearest school and
hospital. Unsurprisingly, only about half the adults in
The early part of the liberalisation period was not rural areas have access to financial services.
without incident. The 1992 financial sector liberali-
sation created a buzz of new energy, prompting the The banking-sector-specific digital revolution offers a
creation of eight new banks by 1995, raising the total tiny glimmer of hope for some rural dwellers to gain
to 19. But in 1995, disaster struck. Zambia’s largest access to financial services . The innovative new
private bank, Meridien BIAO, collapsed under the services are opening up new products that could im-
weight of a money laundering and siphoning scandal. prove financial access to informal, rural communities
The contagion to other commercial banks could not who once went without.
58 BANKING ARTICLE

However, the extent to which technology can be har-

nessed and spread to rural areas is hampered by the
limited incomes and tech-savviness of rural popula-
tions. From 2004 to 2015, the Government pursued
financial inclusion mainly through the Financial Sec-
tor Development Programme, which officially ended
in June 2015, with no account of its success or failure.
The Bank of Zambia has continued to conduct finan-
cial literacy campaigns and developing mechanisms
to encourage outreach of financial services to rural
areas. The fiscal and development authorities have
also implemented rural programmes like the Farmer
Input Support Programme (valued at about K300m in
2017) and social cash transfer schemes, which have
supported urban-to-rural resource transfers.

But despite the growing market of potential finan-

cial services clients in rural areas, the proliferation of
banking services to these areas remains low. After all,
as someone once said: “a real banker doesn’t make
money off poor people”. Thus, the expansion of af-
fordable commercial banking services to rural areas
is a human progress Story that is yet to happen in
Zambia.
 BANKING INTERVIEW 59

A Confident Look to the Future

Mizinga Melu, Managing Director, Barclays Zambia
BRIG: There is a strong focus on the stimulation of BRIG: How would you describe the current competi-
Zambia’s economy through the diversification of its tive landscape for retail banking?
main sectors and the deepening and supporting of
Zambia’s industrialization capacity. How do you eval-
uate the outlook for Zambia and Government’s efforts
to stimulate the economy?

Mizinga Melu: Mizinga Melu:

Zambia’s economic outlook is positive with the Min- The environment is very competitive. With nineteen
istry of Finance projecting 4.3% growth for the year banks active in the market, the competition has in-
2017 mainly supported by increased copper produc- creased in the last few years. Furthermore, the in-
tion and improvements in agricultural conditions and terplay with foreign financial intermediaries such as
output. The exchange rate is expected to remain multi-national corporations and aggregators has in-
stable given currency appreciation through most of creased the intensity of competition and has resulted
2017, though losing some of its gains more recently. in an increase in the cost of doing business in the
The local currency has been supported by improved Banking sector, leading to reduced margins. It is im-
flows from the mining sector and off-shore investors portant to note that the change in the landscape has
in Government securities. Off-shore participation has resulted in a major shift in the banking sector as cus-
reduced in the second half of the year, probably pend- tomers are being provided with a wide range of prod-
ing the closure of the long awaited IMF deal. The ucts and services. Therefore, the healthy competition
Monetary Policy remained relaxed since February, re- has been beneficial to customers and has helped the
sulting in increased liquidity in the market and decline sector to grow, making it more aligned with global
in interest rates, which is expected to result in credit banking trends that are anchored on convenience
extension support to key sectors of the economy. The and flexibility for the customer. Ultimately, banks have
only risk to interest rates will be Government domes- become more innovative in the solutions that they are
tic financing through securities, which could push in- providing, especially around digital channels and the
terest rates to edge upwards. The inflation rate has future continues to look more positive based on how
stabilized and is expected to remain in single digits. much more we can offer customers.
After the difficult years of 2015 and 2016, the copper
price has risen globally by 17%, positively affecting
the Zambian exchange rate stability and economic
activity in general. The positive economic outlook of
the country was affirmed by the Standard & Poor’s
credit rating upgrade from negative to positive with a
stable outlook.
60 BANKING INTERVIEW

BRIG: How can the Government and the private BRIG: What makes Zambia an attractive investment
sector make Zambia more competitive globally? destination?

Mizinga Melu: Mizinga Melu:

There are certain steps that should be taken. First of The Zambian economy has under gone critical re-
all, Public-Private-Partnership should be encouraged, forms under the Economic Stabilisation and Growth
and the government and the private sector should Programme to implement fiscal consolidation, re-
work together in formulating such a policy. The formal moval of subsidies, reforming the energy sector, and
sector should be strengthened by providing tax incen- embark on the diversification of the economy through
tives as there are still very few players and a large in- agriculture development and industrialisation. The
formal sector that does not contribute to the country’s government is also committed to ensuring fiscal
tax base. The banking sector would be further devel- consolidation, economic stabilisation, and growth.
oped if cash interactions were reduced by introducing Steps have been taken to reduce borrowing by en-
statutory instruments; for example implementing item hancing resource mobilisation initiatives such Public
value limits on cash payments. The ease of doing -Private-Partnerships, increasing grant-inflows, and
business must be deliberately simplified by stream- reinforcing tax-related initiatives that are targeted at
lining the business registration and licensing process strengthening enforcement and compliance. As such,
for example the registration of a company, VAT, tax, the Zambian economy is certainly one that investors
the trading and investment licences should be han- should look at to make their investments.
dled by one institution and processed within a very
short period of time, ideally 24 hours. Zambia should
also institute policies that make the cost of capital and
borrowing cheaper. We should encourage the local
investors to participate in the economy with enhanced
access to finance.
 BANKING ARTICLE 61

The Experience of Alternative Financing in Zambia

By Lishala C. Situmbeko

The Challenge:
In a 2007 study of 26 African countries (Gelb et al), of a business will vary across the different stages of its
results showed that on average, the percentage of growth. It is not surprising therefore that while access
firms citing access to finance as a major or severe to finance ranked as the top challenge for SMEs, it fell
constraint was higher than for any other constraint outside the top 3 challenges for large firms, which in-
(electricity, corruption, macro-economic instability, cluded practices of the informal sector, electricity and
and labour regulations). Zambia is no exception with sufficiently educated workforce. About 34% of large
about 27% of Zambian businesses citing access to fi- businesses have a credit line with a bank compared
nance as a challenge, with the weight of this problem to about 5.2% of small businesses.
falling disproportionately on micro, small and medium
enterprises (MSMEs), as revealed by a World Bank Why Can’t Banks Lend More?
Enterprise survey of 2010. Many firms therefore rely Bank lending to the private sector in sub-Saharan Af-
on internally generated funds to finance investments rica, including Zambia, has actually improved over the
and to grow. Banks are the third largest source of past years. In Zambia, commercial bank lending to
funds or largest external single source of funding to the private sector was equivalent to about 16.5% of
enterprise in Zambia. It’s probably as a consequence gross domestic product (GDP) in 2014, representing
of this that banks have borne the brunt of criticism for over 200% growth over the preceding decade. How-
not doing enough to meet the private sector’s borrow- ever, the country lagged behind several of its peers in
ing needs. However, it is likely that due to the infancy the SADC region on this measure, which gives some
of the Zambian capital markets and under-utilization credence to cries from the private sector to ease ac-
of alternative sources of finance, the financing prob- cess to bank credit.
lem is exacerbated. It should be clear at this juncture that a financing gap
exists in the market. It is also at this point that we
The Corporate and Private Business Landscape: must step back and ask: What is the appropriate type
To provide some context to the issue of financing it of financing to fill this gap? It is safe to say that, in
is important to consider the landscape of Zambian Zambia, it is a commonly held belief that if you need
business. Over 90% of businesses in the country are financing, you get a loan and ideally from a bank. It
MSMEs with a 2000 study describing the business is therefore, disappointing for both enterprise and in-
environment as consisting of dual universes of a large dividuals alike when they are unable to obtain a loan
number of MSMEs and a small number of large cor- from the bank after either failing to meet lending re-
porates with a relatively missing middle. This is an im- quirements or interest charged on the proposed facil-
portant note for our discussion as the financing needs ity is too high. This is especially true for small busi-

Lishala Situmbeko is Chief Commercial Officer at Zanaco Bank Plc. He is an experienced finance professional with a
combined 21 years of experience in commercial banking, central banking and government. An accomplished economist,
Lishala has a passion for business strategy and bringing the best of global business practice to Zambian businesses. All
views expressed in this articles are those of the author and should not be attributed to any institution.
62 BANKING ARTICLE

nesses, which tend to have little collateral, inadequate for private equity (PE) funds and venture capitalists
financial records and little management experience (VC).
or track record. Larger businesses on the other hand The number of venture capital funds remains small
may sometimes run into challenges to fund large pro- in Zambia, but has grown over the years with names
jects, which banks may not easily accommodate or like Kukula Capital as a prominent example of a local-
lack the appetite for either single entities or in syn- ly based fund. Foreign VCs do operate in the country,
dicate. but more on a deal basis with the parties likely to have
Evidently the banking sector cannot fill this financing struck the deal in their home country. With strong fun-
gap alone and we must therefore consider the alter- damentals and the country’s high ranking on the ease
natives. In countries with well-developed capital and of doing business, Zambia is an attractive target for
money markets, several players outside commercial foreign venture capitalists and private equity manag-
banks play a key role in the smooth functioning of the ers. The country ranked in the top 10 for PE deals and
financial system and meeting the diversity of invest- mergers and acquisition targets in 2016.
ment and funding needs of the market. These players Challenges however include the relatively small pool
include stock exchanges, investment banks, private of optimal deal sizes and family owned businesses
equity and hedge funds as an example. unwilling to cede control of their business and there-
In Zambia, notwithstanding the several positive de- fore preferring debt financing. The benefits of having
velopments in the capital markets, it is within reason a venture capital partner, however, can be immense,
to state that most markets outside banking are still including bringing to the business expertise and net-
at their nascent stages, particularly in comparison to works that VCs usually come with. It is important
peers such as South Africa and Kenya. Let us then therefore to sensitize small businesses to the exist-
review the role that capital market players away from ence and benefits of these avenues of financing and
commercial banks have played and can play to re- help them understand and meet VCs’ requirements
duce the financing gap we earlier highlighted. for investment.

Private Equity for Early Stage Companies: The Stock Exchange, Equity and Debt Financing:
During the early stages of a company’s formation, the The Lusaka Stock Exchange is the sole platform for
business will tend to have little capital, intermittent or listed equity trading and was established in 1994
no cash flow or fewer performing assets. The busi- at the time to mainly facilitate privatization of state
ness owner or entrepreneur is unlikely to have much -owned enterprises. It has a market capitalization of
management experience or be financially savvy. This about $6.1bn with a total of 24 companies listed on
poses a high risk for any lender, more so for banks the exchange.
with a risk appetite tempered by regulatory considera- After a flurry of listing in the 1990s mainly after the
tions as well as their fiduciary responsibility to deposi- privatisation of state-owned companies, listings sig-
tors. nificantly slowed down in the 2000s. Of the 24 com-
Given that early-stage businesses form a large part of panies listed on the exchange, 4 were listed after the
the Zambian business community partially highlights turn of the millennium with activity dominated by rights
the difficulty in accessing finance. Debt is not particu- issues and medium-term note issuances. About 14
larly suitable for early-stage businesses and ideally at rights issues, 7 corporate bonds and 11 medium-term
this stage an angel investor or equity partner will be notes have been listed on the exchange from 1999
more constructive in growing the business. Financing to 2016. The issue of bonds and notes was primar-
early-stage businesses is a realm particularly suited ily dominated by financial institutions and possibly
 BANKING ARTICLE 63

represents an unutilized opportunity for other market risks that say a venture capitalist can take. However,
players. banks are an important source of short, to medium,
This particular avenue of financing is particularly suit- term credit including trade finance that allow busi-
able for obtaining long-term capital. Adoption of this nesses to run their daily operations more smoothly
option has been highlighted by the slowdown in ini- and add some leverage to the capital structure to
tial public offerings (IPOs) and dominance of foreign optimize returns. However, commercial banks cannot
players and financial institutions in debt issuance sufficiently meet all the financing needs of businesses
on the exchange. Some of the challenges that have and this is where the synergy opportunities across the
been put forward from the business community in- different providers of finance discussed above exists.
clude the administrative and financial cost of listing With the ongoing developments in Zambia’s capital
as well as the increased scrutiny and cession of cor- and money markets, we should ideally be able to, in
porate control. the near future, create a strong financing value chain
where start-ups and young businesses with poten-
Commercial Bank Lending and Making It All tial are financed and developed by venture capital-
Come Together: ists and equity partners, their growth accelerated by
Commercial banks, due to the nature of their funding commercial bank financing and finally facilitating their
i.e. volatile deposits mainly from ordinary individual major expansion through debt issues or public listing.
and business customers, are less able to take the
 BANKING INTERVIEW 65

100% Indigenous
Simangolwa Shakalima, Managing Director, Investrust Bank

BRIG: There is a strong focus on the stimulation of

Zambia’s economy through the diversification of its
main sectors and the deepening and supporting of
Zambia’s industrialization capacity. How do you eval-
uate the outlook for Zambia and Government’s efforts
to stimulate the economy?

Simangolwa Shakalima:
The diversification agenda has been topical over the Thirdly, we have had much support from the co-oper-
last few years. What has been lacking in the past is ating partners, namely the development finance insti-
a deliberate resolve and taking the right approach tutions, who are deliberately supporting several such
the correct policy directives, and the support from the initiatives with funding and risk sharing to support the
various sectors of the economy, including the bank- diversification agenda. The outlook of the economy is
ing sector. Now, we are starting to see more tangible extremely bright and on the right trajectory as Zambia
results – the discussion has gone from boardrooms has embraced the diversification of the economy fully,
and political rhetoric to actual economic activity. We from the National budgets stretching to the Seventh
are starting to see a shift and changes even in the National Development Plan.
banking sector landscape. If you look at the Bank of
Zambia statistics with respect to lending, the “other”
category where the individuals fall in, is 30%, the ag- BRIG: How would you describe the current competi-
riculture sector accounts for 20%, mining sector 6%, tive landscape for retail banking?
manufacturing 10%. From these figures, we see that
diversification is already yielding results. Simangolwa Shakalima:
Secondly, there has been a realization, not just from It is very competitive. We probably have too many
the Government but from the citizenry, about the real banks for the existing economic activity and clients
opportunities in other sectors. One can see many are spoilt for choice. It has had many benefits, no-
Zambians nowadays venturing into other sectors oth- tably, that the strength of the banking sector has
er than mining. There is vast potential in the energy, reached unprecedented levels and the financial liter-
tourism and agriculture sectors. Zambia has learned acy amongst individuals and companies have grown.
the best practices from other economies and we see The focus, though has been on the formal banking
the interest from international companies and off- practices and, while the retail segment is very com-
shore players in forming partnerships with local indi- petitive, opportunities have arisen in terms of the
viduals and companies who need assistance in terms unbanked. Banks have become very innovative on
of expertise and financing. how to increase “the size of the cake”. The signifi-
66 BANKING INTERVIEW

cant investment in ICT has assisted this acceleration Simangolwa Shakalima:

and is supporting the growth of the wider retail bank- It is satisfactory, but more needs to be done and we
ing. It also increases the competition, however, it also welcome the new regulations of the segment by the
creates room for collaboration between the various Bank of Zambia who are stepping in as a regulator to
players in the sector. Competition is now much wider create oversight for capital levels and other metrics of
as it encompasses not only banks, but micro-finance compliance. We see a positive change happening in
institutions, insurance companies and mobile network terms of corporate governance and consumer protec-
operators. tion. The number of companies providing micro
-finance services is very high and the regulatory bod-
BRIG: What developments are taking place in the ies still have room for improvement on this issue.
Zambian market for business loans and other financ-
ing?

Simangolwa Shakalima: BRIG: How can the Government and the private sec-
Firstly, the Government itself is now able to access tor make Zambia more competitive globally?
financing from international lenders to support in-
frastructure development. In the last five years we
have seen more developments than the two dec- Simangolwa Shakalima:
ades before. And, we are already starting to see the First of all, we all have to agree on priorities and that
downstream developments as there are opportuni- confidence building is crucial. The government must
ties to support the suppliers and contractors who are be able to prove to all stakeholders that they are firm
involved in the value chain and business loans are on their policies and regulations. For example, the fis-
being availed. cal consolidation is paramount and is on course. We
We have broader services than we used to have in the will not be able to develop this market if we rely on
past. Previously, we had traditional lenders – banks, external sources alone. Even as we access global
however, the sector has changed to let in the micro- markets, the public sector needs to show they are on
finance institutions, we have a few venture capital the right track. Secondly, ongoing engagement is crit-
entities, we are also seeing the insurance companies ical. We have various fora available to us to sustain
becoming asset managers, so the depth of the sup- such engagement and the voice of the private sector
ply side is growing and more options have become is being heard. Thirdly, the government has availed
available. The demand has always been there, and several public private partnerships and it is critical for
the biggest changes we are seeing are in the supply the Banking sector to support such initiatives.
of lenders.
We have recorded quite a few success stories when BRIG: Do you have a final message to the potential
it comes to performance. In the past, the default rates investor interested in Zambia?
were extremely high, however, due to the maturity
of the market they are decreasing and encouraging Simangolwa Shakalima:
further growth in business loans. Investrust Bank is Our business environment in terms of macro-eco-
expanding business lending to sectors other than nomic indicators is very stable. After the unique chal-
mining. Invoice discounting in Zambia has also grown lenges of 2015 and 2016 we have returned to a point
as a subsector, especially in the mining and agricul- where the economy is stabilizing and improving and
ture sectors to enable companies to have operating the ROI is growing. Secondly, the opportunities for
capital. growth in the Zambian market are immense, espe-
cially seen in sectors other than mining. The financial
BRIG: Micro-finance is currently growing as a sub- sector has enough depth to allow for proper risk man-
sector. Do you feel the oversight of this segment is agement to support various businesses. So, Zambia
satisfactory? remains an attractive investment destination.
 BANKING ARTICLE 67

Zambia as an Example of Leap-Frogging Forward through

Adaptation of Technology
Words by Kelvin Chikomo, Director, cGrate, Zambia Limited (543 Konse Konse)

I have often been asked why I left South Africa and in size, this translates to roughly 1 ATM per 376 km² in
moved back to Zambia. South Africa has the life- Zambia as compared to 1 ATM per 0.86 km² in Hong
style and more developed amenities and Zambia is Kong. Zambia has a population density of 21.15 per
still growing with less-developed infrastructure. One km² yet Hong Kong stands at 6,690 per km². An ATM in
main reason has been the opportunity to make a real Zambia is less profitable than it is in Hong Kong, pure-
difference to our African communities in a field that ly based on the population densities. This is a classic
has been dominated more by developed nations. case of Zambia needing its own unique cost-effective
way of customers accessing their funds, a challenge
The top three companies by market capitalization that can be addressed through innovative IT solutions.
in the last three years have all arguably been Infor-
mation Technology (IT) companies, i.e. Apple, Al- One common feature in Zambia is the prevalence
phabet and Microsoft. IT has the ability to transform of small grocery shops everywhere you go, be it in
people and nations with limited investment. IT has the urban or rural areas. How about having all these
transformed the way we interact and operate; some small grocery shops serve as mini ATMs, they are liq-
good examples include Uber (Ride Sharing), AirBnB uid with cash from their sales and have a challenge
(Home Sharing) and MoBike (Bike Sharing). IT has of taking the funds to the banks. How about provid-
the ability to address socio economic challenges in ing an IT platform to ensure that customers withdraw
more efficient ways and in non-traditional ways. from these shops and the grocers have funds imme-
diately remitted to their bank accounts? The service is
Zambia has its equal fair share of socio-economic an extension of the grocer’s existing business, which
challenges. The traditional copy and paste approach means it does not put a strain on profitability and is not
of implementing what the 1st world has done is not a new cost. The availability of these grocers country-
the way to address these socio-economic chal- wide addresses the challenge of setting up expensive
lenges. As Zambia, the geography of the country is ATMs in a country of very low population density. The
different, the population densities are different, the cost of the device used by the grocer is either negligi-
levels of literacy are different, the culture is different, ble or a very small fraction of what an ATM would cost.
the source of income and levels of development are
all different. Zambia requires solutions that speak to As such, we are providing means for customers to
these differences and address the unique challenges access their funds by linking bank customers to their
as they are; some of these solutions will leap-frog so- banks through grocers and online merchants. Such
lutions that are predominantly used in the 1st world. solutions address our day to day socio-economic chal-
lenges in our own unique way, which fits in well with our
One particular challenge that one encounters when current economic capabilities, our literacy levels, our
coming to Zambia is the availability of ATMs and sources of income, our geography and most impor-
points to access cash. Zambia has fewer than 2,000 tantly our culture. Often, we blame ourselves and our
ATMs in a country that is 752,618 km² in size, in com- colonial history for our social ills, it is gratifying being
parison, Hong Kong has over 3,200 ATMs in a territo- able to make a difference, being part of the solution and
ry that is 273 times smaller than Zambia at 2,754 km² being part of this new wave of African Renaissance.
68

Ubunang’ani, tabulisha kasuma. (Bemba)

Laziness does not enable one to eat something good.
One should work hard to lead a good life.
CAPITAL MARKET
Several incentives established to promote growth in the sector

Rules and listing requirements updated in 2016

Financial inclusion and literacy programmes developed

Second-tier market to promote listing of SMEs

70 CAPITAL MARKET ANALYSIS

Capitalising on the Situation

A Trend of Upward Trajectory
BACKGROUND:
The stock exchange in Zambia is known as the Lusaka of supporting and enhancing private-sector initiatives, it
Stock Exchange (LuSE). LuSE opened its doors on the also has a role in attracting foreign portfolio investments in
21st of February 1994 after the International Finance Cor- recognition of Zambia, and the region, as an emerging
poration’s and the World Bank’s preparatory technical as- capital market that has potentially high-investment re-
sistance in the preceding year. Its establishment followed turns. Its other role is the facilitation of divesting the Gov-
Zambia’s economic and political liberalisation in the early ernment’s ownership in parastatals towards the attain-
1990s. In 1993, the Securities Act of 1972 was amended, ment of the objective to create a broad and wide
which allowed the establishment of the Securities and Ex- shareholding ownership of the citizenry through a fair and
change Commission (SEC) in order to regulate the Zam- transparent process.
bian securities market. The amendment of this Act was
aimed at holding shares, in trust on behalf of Zambians, REGULATIONS:
from the divestiture of state-run companies as they be- LuSE’s rules and listing requirements are supported by
came privatised. LuSE’s establishment was part of the legislation that was enacted as the Securities Act No 41 of
Government’s economic reforms aimed at the stimulation 2016, which repealed and replaced the Securities Act No
of the private sector in becoming the driving force of eco- 38 of 1993. This Act regulates the entire Zambian securi-
nomic growth in the country. The Government provided ties market and is specifically designed to ensure ade-
grant funding to the LuSE until 2009. Thereafter, LuSE quate investor protection and, support the operation of a
was dependent on listed companies in generating opera- free, orderly, fair, secure and properly-informed securities
tional income and, its sustainability dependent on increas- market. The Act created and defined a central market in
ing the amount and size of companies listed on the ex- which both unlisted and listed securities could trade on
change. exchange as opposed to the dual market system.
Several incentives had been established for the promo- The Act established the SEC as a corporate body. The
tion of rapid development in the country’s capital market. SEC has powers under the Act to regulate and supervise
These incentives include the following: the securities industry in the country. The regulatory pow-
• No exchange controls; ers of the Commission have four major requirements:
• No restrictions on foreign ownership; • That any person dealing or advising on securities
• No capital gains tax; must be licenced by the SEC;
• No withholding tax; • That any securities market must be licensed as a
• Corporate tax discount of 3% securities exchange by the SEC;
• No property transfer tax on listed securities. • That all securities of a public company, which are
LuSE consists of stockbroking corporate members and it publicly traded, must be registered by the SEC; and
is incorporated as a non-profit limited liability company. • That collective investment schemes must be author-
There are currently six members of the exchange with ised by the Commission.
three firms handling the bulk of the trades. Besides its role Under the Act, a Compensation Fund was established
 CAPITAL MARKET ANALYSIS 71

and designed to compensate persons who suffer a pecu- • Develop and implement a framework for SME listing
niary loss occasioned by the default of a licensed dealer on the stock exchange;
or licensed investment advisor. It is a mechanism that is • Promote the diversification of delivery channels
aimed at creating investor confidence in event of default through partnerships and other market-based syner-
by a dealer or investment advisers. Without this, investors gies; and
could lose confidence in the Zambian securities industry. • Formulate and implement a national financial inclu-
This revised Act has addressed Private Equities, previ- sion strategy.
ously not included. Institutional funds can now invest in In terms of the promotion of increased financial literacy
existing unregulated private equity structures and there is and stronger consumer protection, the measures are to:
protection of their interests. Provision for a Capital Markets • Develop and implement a new National Strategy on
Tribunal has also been included. Financial Education (2018–2023) that is inclusive of
The National Financial Sector Development Policy (NF- all financial subsectors;
SDP) of 2017 has the broad policy objective of providing • Develop and implement a framework to support
a framework that will lead to the development of a stable, consumer protection and product information disclo-
resilient, competitive, innovative and inclusive financial sure; and
sector that contributes to broad-based wealth creation • Enhance the supervisory functions of financial sec-
and sustainable economic development. It has seven tor regulators.
specific objectives that stem from this; these are: The Policy’s implementation and monitoring will be close-
1. To develop a competitive and resilient financial sec- ly monitored by the Ministry of Finance to ensure its insti-
tor; tutionalisation across the sector. Financial sector stake-
2. 2.To develop and maintain an enabling regulatory holders will develop indicators in line with the strategy with
environment for the financial sector; baseline benchmarks agreed upon by other stakehold-
3. To make the financial sector more inclusive and ers. The policy is in effect for ten years and will be revised
deepen the financial markets; to according to developments in the sector.
4. To develop MSMEs and rural finance; The NFSDP of 2017 stated that in line with the SEC’s
5. To enhance financial infrastructure in accordance mandate, “it shall be responsible for, but not limited to,
with international best practices; development of a regulatory framework for the capital
6. To increase financial literacy and strengthen con- markets that promotes business and protects investors
sumer protection; and from fraudulent market, operations. It shall promote diver-
7. To facilitate effective and sustainable partnership in sification of capital markets, products and services, effi-
the provision of financial products and services. cient capital markets infrastructure and institutional ar-
Specific measures that are pertinent to capital markets rangements, and investor education and public
have been extracted from the specific policy objectives awareness for capital markets, products and services”.
described above and the measures relating to these are
described below. Measures relating to the development of MODERN STOCK EXCHANGE AND CENTRAL
a competitive and resilient financial sector are to: MARKET SYSTEM:
• Build the institutional capacity of financial sector LuSE was set up as a modern stock exchange that is
regulators to carry out assessments of the develop- based on the most recent international standards and
ment of the financial sector and subsectors; practices, which include the following:
• Undertake programmes to modernize the structure, • Use of a central share depository system;
functions, and operations of regulators; • Trade-for-trade netting clearing and settlement pro-
• Promote the development and implementation of cess;
subsector strategic plans; • Rolling settlement 3 days after the trade (T+3);
• Encourage the development of customer-tailored • Meets G30 recommendations for clearing and set-
products and needs; tlements system design and operation; and
• Promote the mobilisation of local resources; and • Strong investor protection legislation and centralised
• Promote attractive savings and investment prod- market.
ucts. The country’s securities market was designed as a central
Pertinent measures for the development of a more inclu- market system or unified market. This is whereby virtually
sive and deepened financial markets are to: all trading is conducted through the stock exchange. This
• Promote the establishment of well-developed and differs to the dual market system where only selected
diversified financial products and services, including stocks are listed and traded on exchange (occasionally
savings, credit, transfers, capital markets products referred to as the organised exchange or exchange mar-
for low-income groups, micro pensions and micro ket), while the remainder is traded as unlisted stocks
insurance; (typically known as traded over-the-counter/OTC and oc-
72 CAPITAL MARKET ANALYSIS

casionally termed a decentralised market). Zambia’s nies need to buy trading rights but not necessarily shares.
central-market design allows unlisted public companies Secondary trading in government bonds is limited, which
and government bonds to be quoted and traded on consists mainly of bilateral trades between banks and this
LuSE’s second-tier market. Beyond this advantage, it has is reported to the LuSE. Additionally, bonds and com-
several others. All trading activity is channelled through modities derivatives exchanges are recent entrants in the
one market. This enhances liquidity (ability to trade both capital market. Between 2011 and 2016, brokers and in-
quickly and without substantially moving prices) and mar- vestment advisers have increased by more than 50%.
ket depth (the ability to transact at the current market During the same period, assets under fund management
price), which ultimately determines the success or failure that used collective investment schemes almost in-
of a market. A central market is an effective method aimed creased by 300%. However, the capital market is largely
at compensating for low volumes and thin trading activity underdeveloped and characterized by low issuances, illi-
that is characteristic of newer stock markets; thus enhanc- quidity, low turnover, lack of depth, devaluation of some
ing market liquidity by providing the necessary critical stocks and, minimal interest from both potential investors
mass. It also reduces duplication of efforts and provides and issuers. Enhancing the capital markets will be based
maximum transparency of deals in securities, which mini- on robust policies and regulatory frameworks, diversified
mises the opportunities for malpractice and enhances products and services, efficient infrastructure and institu-
price reliability. tional arrangements, and investor education and public
Another advantages of LuSE’s centralised structure is awareness, especially among the local population.
from empirical evidence on shares’ price formation on the
LuSE. Stock price movements show a general pattern of CHALLENGES AND OPPORTUNITIES:
initially high market entry prices, which is followed by a It has been said that Zambia’s capital market is too small
significant drop in prices; over time with increased trading and underdeveloped to support the country’s desired
activity, prices gradually level off to a stable price. This is a growth prospects and as a source of financing for busi-
display of market transparency, which enhances market nesses. The alternative investment market/second-tier
efficiency and price formation. market was introduced to cater for SMEs as a means to
LuSE is a self-regulatory body. Any regulatory changes access long-term capital. This initiative has not been a
are discussed with stakeholders and thereafter approved success yet. The alternative market shows a large poten-
by the SEC. Information systems are linked to global plat- tial for growth as over 60% of the Zambian economy is
forms in real time, thus local developments are displayed driven by SMEs. LuSE is also working with the IDC in at-
globally and daily trading information is published on tracting state-owned companies to list in the medium to
LuSE’s website. The LuSE All Share Index (LASI) was long term.
introduced in 1997 and had a base of 100 points, it has It has been found that the general population are barely
since risen to 5,343.25 as of early December 2017. The involved in investing on the stock exchange. While there
LuSE had 23 listings as of early December 2017 and has are mechanisms in place for involvement, awareness and
recorded very few new listings since inception. When clarity could be limiting factors. LuSE works with schools,
compared to the GDP at the end of 2016, the exchange universities and the Zambia Institute of Policy Analysis
had a low market capitalisation ratio of 16%. The LuSE and Research in creating awareness. Other forms of cre-
private debt market, consisting of corporate bonds and ating awareness include radio shows and public aware-
notes issued under a medium-term notes programme, is ness campaigns as well as running workshops with
underdeveloped, with almost no secondary market trad- SMEs to promote listing. LuSE has teamed up with the
ing. However, issuance thereof is more frequent than the ZDA and the Zambia Chamber of Commerce and Indus-
equity market. try for the promotion of LuSE on investment roadshows.
Zambians in the diaspora are also informed and encour-
TRADE: aged to invest through the embassies and high commis-
In order to increase trading activity, the trading rules were sions. The diplomatic community and foreign companies
changed by separating the ownership of shares from bro- in Zambia are also encouraged to invest and list on the
kerage. With these new requirements, brokerage compa- stock exchange.
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74 CAPITAL MARKET INTERVIEW

International Standards, Local Expertise

Priscilla Sampa, Chief Executive Officer, Lusaka Securities Exchange

BRIG: What steps are being taken to strengthen

good governance and increase trading transparen-
cy?

Priscilla Sampa:
The Lusaka Securities Exchange follows the best in- companies must buy trading rights, but not necessar-
ternational practices of financial reporting. Every year ily shares. Also, the board membership of the com-
we review the annual reports of the listed companies pany is now constituted differently and consists of a
and award those who have adhered to good corpo- total of 7 from the previous 12, three independent di-
rate governance principles. We have created a panel rectors, one representative from the brokers with
that consists of relevant institutions; namely, Zambia share ownership, one representative from the listed
Environmental Management Agency (ZEMA), Zam- company, and one from the trading participants and
bia Chamber of Commerce and Industry (ZACCI), the shareholders. LuSE has also started working with
Zambia Institute of Chartered Accountants (ZICA), Industrial Development Corporation to attract the
Law Association of Zambia (LAZ), Bankers Associa- state-owned companies to list on the Stock Exchange
tion of Zambia (BAZ) and Zambia Institute of Direc- in the medium and long term.
tors (IOD) and awards are presented in various cate- LuSE is operating an Alternative market for SMEs list-
gories – Best Leadership, Corporate Governance, ings. The LuSE Alternative market (Alt-M) offers much
Declared Dividends and Green Award. opportunity for growth. Over 60% of the Zambian
LuSE is a self-regulatory body. The stakeholders are economy is driven by SMEs, just emphasising the im-
invited for a discussion on the regulatory changes portance of this tier. All segments of the exchange
which are then approved by the Securities and Ex- have growth potential, as there is much room for im-
change Commission. Our information systems are provement and currently the LuSE is enhancing tech-
connected in real time with global platforms, such as nologies through the implementation of improved new
Bloomberg, and Reuters thus the information on the IT infrastructure and venturing into new products such
developments on the local market are disseminated as ETF’s.
globally. LuSE similarly publishes all information on
daily trading through the LuSE Daily Stock News Ser-
vices and on its website.
To increase the trading activity, we have also changed
the trading rules on the LuSE as a result of the demu-
tualization process, which the LuSE embarked on in
2014. This entails the separation of the ownership of
shares from brokerage. This will therefore increase
the number of brokers and ultimately increase trading
activity. Following the new requirements, brokerage
 CAPITAL MARKET INTERVIEW 75

BRIG: What is supporting the current trend toward BRIG: What types of measures are being taken to
increased corporate activity in the capital markets? Is help increase the visibility of the LuSE on both do-
developing a second-tier market a possibility in mestic and international fronts?
Zambia?

Priscilla Sampa: Priscilla Sampa:

Increased corporate activity on the exchange, and the The mechanisms for capital access are already in
economy in general, is being driven by renewed in- place, however the local markets still needs more
vestor confidence as the country’s macro-economic awareness and sensitisation. The LuSE is working
fundamentals have significantly improved. The infla- with the Zambia Institute of Policy Analysis and Re-
tion rate has declined to single digits for some time search (ZIPAR), universities and schools to promote
now and is forecast to remain anchored in the 6% to awareness. We are also running a radio show, con-
7% range. The current account deficit narrowed sig- duct outreach/public awareness campaigns and train-
nificantly from $574.7m to $257.1m since last report- ing for SMEs to build understanding, interest and ca-
ed in the first half of the year. pacity among participants. In this regard we are
The latest monetary policy statement highlighted the working with ZDA as well. We are collaborating with
many improvements in the macro-economy, resulting the Zambia Development Agency and with the Zam-
in the lowering of the policy rate and reserve require- bia Chamber of Commerce and Industry to promote
ments. This is anticipated to further reduce interest LuSE on their roadshows so that when both institu-
rates, consequently making substantial funds availa- tions are working to engage investors, they are also
ble at lower borrowing costs. raising awareness of the LuSE. Likewise, information
The resultant decrease in interest rates will mean, is disseminated to Zambian embassies and high
firstly, that yields on Government bonds will be less commissions abroad to educate the diaspora Zambi-
attractive relative to yields on equities, which will result ans about investing in our Capital Market.
in more trading activity on the equities market. Sec- Lusaka Securities Exchange has also taken steps to
ondly, corporations will have an opportunity to raise promote investment by working with the diplomatic
funds via issuing corporate bonds as bench mark community in Zambia and interacting with foreign
yields have fallen. This means that the costs of servic- companies operating here to interest them in invest-
ing these bonds would be lower. Thirdly, SMEs not yet ing in the local stock market. The recent years have
in the prescribed “growth phase” will have the oppor- shown relatively high interest coming from the US,
tunity to borrow funds from banks and grow to a level Europe and Asian markets like China and Japan.
where they will qualify to list on the alternative market. There has been more investment in sectoral projects
Further the GDP growth rate has now been projected and greenfield initiatives and we would like to see
to rise to 4.3% from an initial 3.4% due to increased more investment activity through foreign companies
agricultural output, recovering generation for electric- buying shares.
ity and higher mining output supported by better pric-
es and power supply. Other sectors that are support-
ing growth are construction, wholesale and trade and
tourism sectors. Higher copper prices will strengthen
the balance of payments and reserve positions, lead-
ing to stability of the local currency, stronger economy
and improved investor confidence. Stock markets
usually do well in periods of high investor confidence.
The nation is currently in a “construction spree” with
shopping malls, especially, on the increase. The stock
market provides an opportunity for corporations and
the Government to list infrastructure bonds.
76 CAPITAL MARKET INTERVIEW

Building on the Momentum

Muchindu Kasongola, Managing Director, and Brian Chintu,
Head of Investments, Madison Asset Management Company

BRIG: How diversified is the Zambian economy?

Muchindu Kasongola:
Zambia has been a mono-economy since independ- last few years Government is making specific strides
ence, depending largely on the mining sector to drive with the diversification story and making it reality. We
the economy. For a while there has been a realisation are beginning to see an actual shift trying to encour-
that there is a need to diversify the economy in order age other sectors.
to manage the risks associated with relying on a sin- Most recently, several opportunities have arisen in
gle sector. For the last five years, we have seen more the energy sector as there is a huge deficit in sub-
of an emphasis on diversification supported by con- Saharan Africa, largely on the account of drought in-
crete government actions and policies aimed at mak- fused effects. Zambia presents a very viable proposi-
ing practical steps to achieving this goal. This poses a tion for potential investors in the energy sector as the
new question – diversifying to what? The agriculture country continues on the shift in Government policies
sector has been one of the key areas of focus for the towards more cost-reflective tariffs. The recent price
last decade with its competitive advantages – vast adjustment has created an incentive for more private-
land and water resources and access to markets in sector investment in the sector. Zambia’s location and
the SADC and COMESA blocks. Such advantages its affiliation to the Southern African Power Pool is an
present an enormous opportunity that has not been advantage and presents an enormous opportunity
exploited to its full potential yet. Value addition leads for the export of power, which will in turn begin to
to salaried positions that support job creation, which in address the energy deficit that the region is currently
turn support the collection of domestic tax revenues, facing. In my view, these are the two sectors that rep-
that assists in bridging the fiscal deficits, will help the resent enormous opportunity with very little structural
economy to run on a positive trajectory. shifts from a policy perspective. If implemented cor-
Zambia has been hit with an economic downturn too rectly, with the right momentum and the continuous
many times for us to continue on the path of mere support from the policy makers, it can lead to a huge
rhetoric. All credit goes to the Government – for the transformation of Zambia’s economy.
 CAPITAL MARKET INTERVIEW 77

Brian Chintu:
I tend to agree – these are the key sectors. The open market. The returns on investments are easy
tourism sector has enjoyed valuable support from to expatriate as no foreign exchange controls exist in
Government and an increased number of investors. this jurisdiction. However, we maybe falling into the
A very important aspect is the value addition, espe- trap of overregulation and we need to watch it very
cially in the agriculture sector where there is a heavy carefully as it could take away Zambia’s competitive
emphasis on processing locally-grown produce. The advantage.
Government is also promoting the industrial hubs,
setting up industrial satellite towns. These in turn, will BRIG: What is supporting the current trend towards
help incentivise investors to bring in funds to process increased corporate activity in the capital market?
raw materials. We have also seen much investment
in the private sector, processing the output of the Brian Chintu:
mining sector, in copper and copper-related finished In the last two years, we have seen a tightening of
products, particularly in the construction sector. liquidity and rising interest rates. The precursor to this
issue was the deterioration of the currency which led
Muchindu Kasongola: to increased inflation rates and the Central Bank hav-
One of the challenges that Zambia always encoun- ing to intervene to tighten the currency supply and,
ters is its relatively small population. It does not repre- therefore enable a shift from the equities market to
sent a sufficient incentive for consumer-led products the money market. During the first half of 2017, the
and services and has to be acknowledged as a short- interest rate has decreased and, again, the shift has
coming. However, the location of Zambia represents moved back to the equities market where we predict
a huge opportunity to access SADC and COMESA medium and long term yields. We continue to experi-
markets. ence illiquidity in terms of trade and stocks available.
Other than the rush by investors to scale up their as-
BRIG: What are the greatest obstacles to increasing set positions in high-yielding debt instruments before
foreign investment in Zambia and how can they be the rates completely come off, which has been the
overcome? driver.

Muchindu Kasongola: BRIG: What can be done to expand access to the

The greatest obstacle has been the consistency capital market for SMEs and other non-traditional
of policies and predictability and the stability of the companies?
economy. Since the beginning of 2017, there has
been a relative stability in the business environment Muchindu Kasongola:
with the exchange rate, interest rates and inflation all A second-tier market was introduced to cater to the
relatively stable and predictable. Due to such factors, SMEs segment on the stock exchange. The initial idea
we have seen an increase in foreign portfolio invest- was to offer reduced requirements but not necessarily
ments, not only on the stock exchange, but also in the reduced standards which was to offer an opportunity
primary Government securities auctions. Every port- for SMEs to access long-term capital. It was launched
folio investor is looking for stability. The recent stability two years ago and to date there has not been a single
has been augmented by the continuous stakeholder listing. The question that we ask ourselves is: Why?
engagement by the Ministry of Finance, which now Firstly, it is either that the stock exchange introduced
provides quarterly briefings on the performance of the the second-tier market without taking into considera-
economy. This level of engagement is extremely im- tion the requirements of the market they are targeting
portant as the access to information enhances trans- or is the SMEs segment still not ready for a reduced
parency and in turn market confidence. benchmark? There has been a lot of debate whether
On the positive side, Zambia has always been a very we need some form of intermediary sources of capital
78 CAPITAL MARKET INTERVIEW

for SMEs before going onto second-tier board. From uncomfortable with a shared ownership. The regula-
the regulatory point of view, the New Securities Act tor has initiated an education programme for school
was enacted in December 2016 and addresses the children on how the capital markets operate to bridge
regulatory framework around private equity which the knowledge gap through regular competitions that
was previously nonexistent. Before the regulation, focus around the investor operations of the Lusaka
institutional funds could not invest in the existing un- Stock Exchange. Once this segment of the popula-
regulated private equity structures and there was a tion evolves into the working class they will be more
need to protect the interests of the institutional funds. knowledgeable on how to access the funding for their
The next stage is the reform of the institutional funds own business ventures. Over the years, we have also
and set guidelines as to what the institutional funds noticed an improvement in the general savings cul-
can be invested in. With such prerequisites, we could ture and this has been manifested by the increasing
begin to see an increased flow of capital into this as- diversity of clients particularly on the mutual funds
set class. and stock broking portfolios.

To a large extent, the lack of education and under-

standing of the role of capital markets is an issue of
concern. Historically, Zambians have been groomed BRIG: How can the Government and the private
to be employees with entrepreneurship being a last sector make Zambia more competitive globally?
resort and only considered once the route of formal
employment is unattainable. It is envisaged that with Muchindu Kasongola:
the multi-faceted efforts currently been made to ad- From the policy perspective, the government needs to
dress this knowledge gap, we shall see more en- look at how attractive and competitive its policies are.
trepreneurs emerging in the medium term and it is We are competing for the same capital available glob-
hoped that developments in private equity structures ally and the potential investor is searching for a mar-
could provide an answer for such entrepreneurs. ket with less surprises in terms of market, political and
economic risks. The current administration is trying to
monitor the situation against the benchmarked criteria
Brian Chintu: and Zambia has done well to create an open market.
The business culture is a major point to consider. Due They have recognized the importance of consistency
to the knowledge gap, it would take another five to and stability of policy, and the need to incorporate the
ten years for Zambia to have a solid entrepreneurial various stakeholder views. There have been many
base. This is a constantly evolving process. Most of reforms that have taken place to ensure Zambia is a
the young Zambians are investing, applying for mort- conducive business environment. It is easy to expatri-
gages, etc. There is a lack of knowledge about the ate funds and bring investment inflows into Zambia.
policy and regulatory framework. The SMEs segment We have also established a full-stream commercial
would certainly play a more active role if it realised the court a High Court, with judges specialized in com-
access to funding opportunities. Most entrepreneurs mercial litigation, and the government is continuing to
that are knowledgeable about these funding lines are reinforce the independence of the judiciary.
 SHARE ANALYSIS 79

BRIG focuses on
Real Estate Investments Zambia Plc

Real Estate Investments Zambia Plc (REIZ), origi- the same period in 2016. This reduction is attributed
nally known as the North Western Rhodesia Farm- to the strengthening of the Kwacha against the US
ers Co-operative was incorporated in the 1920s with Dollar to average K9.69/$ compared to K10.88/$ in
its current location of Central Park on Cairo Road 2016. In USD Dollar terms, revenue increased by
which served as a collection centre for farming pro- 5.71% because annual escalations and new leasing.
duce. The company was renamed as Zambian Farm- Consequent to the exchange-rate driven reduction in
ers Co-operative in 1964 and the construction of the rental income and inflation-related increase in oper-
Farmers House building was completed in the 1970s. ating costs, profit before other income, finance cost
In 1981, all the real estate assets of the Co-op were and tax declined by 9.34%. The lower change in fair
transferred to the newly formed entity Farmers House value of investment property of K1.987m compared
Ltd. The cooperative owners became shareholders of to K14.627m in 2016 impacted profit after tax closed
the new company on a one-for-one share basis, the the half year with K24.95m compared to K38.09m in
company became a real estate investment vehicle. 2016. The restructuring measures in the REIZ’s op-
The company became public under the Companies erations have greatly contributed to the Group’s solid
Act of 1994 and was registered as the second com- and fundamental performance in the first half of the
pany to list on Lusaka Securities Exchange (LuSE) 2017 financial year.
in 1996. Farmers House Plc was renamed in 2012 The decrease in the fair value of investment property
to Real Estate Investments Zambia Plc and today is between the two periods was reported on in the 2016
primarily involved in investment, development and re- annual report and was attributed to the revaluation of
structuring of commercial and non-commercial prop- investment property at 31st December 2016 which
erty for commercial letting. The Group owns a high resulted in a decrease in value due to strengthening
grade office, retail and industrial real estate portfolio of the Kwacha against the US Dollar during the year
in prime locations with a diverse tenant base that en- despite REIZ’s investment property portfolio posting
sures a maximised yield and attractiveness from both growth in US Dollar rental income and improvements
an investment and financing perspective. in service cost recovery. The fair value of investment
property has been reassessed as at 30th June 2017
GROUP PERFORMANCE: by external independent property evaluator Knight
Reported Kwacha rental income declined by 5.85% Frank Zambia Limited.
for the first six months period in 2017 compared to
80 SHARE A N A LY S I S

BRIG focuses on
Standard Chartered Bank Zambia Plc
Standard Chartered Bank Zambia Plc was estab- activities. The Retail Banking segment includes client
lished in 1906 with the first branch opened in Kalomo segments, such as personal, priority and business cli-
District, Southern Province.In 2017, 110 years later, ents. The Retail Banking segment provides services,
Standard Chartered bank is one of the leading Banks such as current accounts, savings accounts, term de-
in Zambia, with an excellent franchise. It has a total posits, trade finance, overdraft and business loans,
of 25 outlets spread across the country, 47 ATMs - of and investment services. The Commercial Banking
which 4 are Electronic Banking Centres - and over segment manages mid-sized companies that fall be-
700 employees. The Bank has a presence in 6 of tween the CIB and Retail Banking.
Zambia’s 10 provinces with branches in the Copper- BUSINESS PERFORMANCE:
belt, Lusaka, Northern, North-Western, Southern and Standard Chartered Bank Zambia continued to grow
Western provinces. and remained profitable in 2016, against the back-
Standard Chartered is the only international bank in drop of a challenging global and local macroeconom-
Zambia listed on the Lusaka Stock Exchange (LuSE) ic environment that started in 2015. Basic and diluted
and has been ranked the most profitable bank in the earnings per share doubled to K0.208 per share on
country for the last three consecutive years. the back of a profit increase of 94%. This growth was
Standard Chartered Bank Zambia Plc is engaged in driven by a 25% increase in income, a 49% reduc-
the business of retail and commercial banking, the tion in impairment negated by a 9% increase in other
securities services business as well as the provision operational costs.
of other financial services. Its segments include Cor- The 2016 year-end results demonstrate that the
porate and Institutional Banking (CIB), Retail Bank- Bank’s strategy, ability to efficiently deliver to clients
ing and Commercial Banking. The CIB segment in- and the strong emphasis on risk management have
cludes its trading, corporate finance activities, loans, delivered value to shareholders. The capital base re-
trade finance, cash management, deposits and other mains strong, which allowed the Bank to continue to
transactions with corporate customers. The CIB seg- support key sectors of the economy, including energy
ment also includes Treasury unit, which undertakes and mining. Standard Chartered Bank’s advisory ser-
its management and centralised risk management vices to major private companies and Government
 SHARE ANALYSIS 81

institutions also formed a key element of the Bank’s and anti-money laundering requirements remained a
activities in 2016. During the period, Standard Char- key pillar in every aspect of the business. Excellent
tered Bank continued to deepen relationships with progress was made on the digital strategy. The Bank
clients – from large corporates, medium and small introduced, amongst others, the Standard Chartered
businesses, to personal and priority clients. The Mobile Banking Application – SC Mobile a first on the
Bank’s commitment and adherence to regulatory market.

BRIG focuses on
Lafarge Cement Zambia Plc
Chilanga Cement, the Company that would one day of  6 innovative products; Mphamvu, WallCrete,
become Lafarge Zambia, was founded in 1949 and SupaSet, PowerPlus, RoadCem and PowerCrete.
commenced its operations in 1951 with the first major The Company’s aggregates products are used in
project being to supply cement for the construction a range of construction applications, from concrete
of the Kariba Dam wall. Chilanga Cement was the to road and highway surfaces, railway ballast and
first company to be listed on the Lusaka Securities fill material. The Company’s Mapepe aggregates
Exchange (LuSE) in 1996 and was acquired by plant supplies washed aggregates in Zambia. The
the Lafarge Group in 2001. Lafarge Zambia Plc Company operates two cement plants (situated in
is engaged in the manufacturing and selling of Chilanga and Ndola). The Chilanga cement plant’s
cement and aggregates. The company’s segments production capacity is 830,000 tons per annum and
include Local sales, export sales and aggregates. Ndola cement plant’s production capacity is 500,000
The Company also offers ready-mix concrete and tons per annum. The Mapepe aggregates plant’s
others. It is a supplier of building materials and production capacity is 600,000 tons per annum. The
provides construction solutions. The 440 direct Company supplies products by road and rail to the
employees supported by several hundred more entire country, as well as the regional market, primarily
contracted employees continue to add value to the to the Tanzania, Burundi, Democratic Republic of
country’s raw materials that lead to the production Congo (DRC), Malawi, Namibia and Zimbabwe. The
82 SHARE ANALYSIS

Company is a member of Lafarge Holcim Group. in cement exports compared to the first six months of
BUSINESS PERFORMANCE: 2016 and a %4 increase in sales revenues reaching
Lafarge Zambia continued to operate in a challenging K421m. Strict cost management at both plants
environment characterised by adverse economic improved cash costs compared to 2016, despite
conditions, tight liquidity and competitive pressure in the increased power costs and resulted in increase
both export and domestic markets. Adverse weather of operating cash flow by %40. Lafarge Zambia
conditions slowed down market activity during the operating profit decreased from K72m in 2016 to
first Quarter of 2017 impacting market demand and K15m in the first half of 2017. The company anticipate
volume. The second quarter of the year saw domestic increased sales volumes as it is currently supplying
volumes grow by %15. The decline in total sales major construction projects such as the Kafue Gorge
value was mitigated by strong performance in export Lower hydro power plant and the expansion of the
markets with the company recording a %57 increase Kenneth Kaunda International Airport.

BRIG focuses on
Copperbelt Energy Corporation Plc
CEC’s origins date back to the Northern Rhodesia ZCCM – Power Division when Cinergy Global Power
Power Corporation established in 1952. Around 1954, (USA) and National Grid (UK) acquired the control-
the company became the Rhodesia-Congo Border ling stake in the company. Their 77% stake in the
Power Corporation supplying electricity to the mines company was sold to a group of Zambian business-
in Northern Rhodesia and the Congo. Later, the com- men and was listed on the Lusaka Stock Exchange
pany sourced and supplied hydroelectric power from (LuSE) in 2008. Since the successful privatisation
the Congo to supply the mines in Northern Rhode- and subsequent listing CEC has actively sought to
sia before the production of hydroelectricity from the diversify its investments and has expanded its opera-
Kariba Dam. At Zambia’s independence in 1964, the tions into Nigeria, Sierra Leone and Namibia. Today
Rhodesia-Congo Border Power Corporation, be- CEC, a member of the Southern African Power Pool,
came Copperbelt Power Company (CPC), a com- is a Zambian incorporated power generation, trans-
pany that provided electricity to the mines until 1986 mission, and distribution company and a major de-
when it was absorbed into the Zambia Consolidated veloper of energy infrastructure in Africa. CEC owns,
Copper Mines (ZCCM) as its Power Division. CEC operates, and maintains power transmission, gen-
was formed in 1997 as a result of the privatization of eration and distribution assets servicing customers in
 SHARE ANALYSIS 83

Zambia and the DRC, and is one of the largest inter- was K9.54 (2016: K10.70) to the US Dollar, an appre-
national power traders in both countries. CEC has ciation of 11%. The closing rate on 30 June 2017 was
50% direct equity interest in CEC Liquid Telecommu- K9.14 (2016: K10.48). The Company has recorded a
nication Limited (CEC Liquid Telecom), whose busi- profit after tax, for the period, of K211m compared to
ness is the provision of wholesale capacity and inter- a profit of K256m in 2016. The 18% drop in profit is
net bandwidth to the Zambian market, and a host of mainly attributed to currency (Kwacha) appreciation,
other connectivity solutions and ICT services through which has resulted in increased Kwacha operational
its subsidiary, Hai Telecommunications Limited. costs such as labour. Power trading margin increased
BUSINESS PERFORMANCE: Revenue at half year by 11% in US Dollar terms compared to 2016, howev-
2017 increased by 3% in US Dollar terms but was er, due to Kwacha appreciation, the margin reduced
9% lower in Zambian Kwacha terms from K1,914m to by 1% in Kwacha terms.The new tariffs for 2017 were
K1,749m compared to the same period in 2016 due to implemented effective 1 January 2017 to all the mines
the appreciation of the Kwacha against the Dollar.The except for one mine which has continued to resist the
average exchange rate for the first six months of 2017 increment hence, the increase in payables of 11%.
84 SHARE ANALYSIS

BRIG focuses on
Zambia National Commercial Bank

THE COMPANY:
Zambia National Commercial Bank (Zanaco) was September 2016 to K6.9bn in September. in 2017 de-
formed in 1969 by the Zambian Government shortly spite a 36% shrinkage in total market deposits over
after attaining independence in 1964. The Bank was the same period. This was a direct consequence of
formed with a goal to provide meaningful access to process and organizational transformation initiatives
financial services for local business and people in carried out by the Bank with a focus on increasing
a market dominated by foreign-owned banks at the operational efficiency and strengthening the sales
time. It quickly grew to become one the country’s larg- model. This also led to a 28% jump in total revenue
est banks by branch network as well as by deposits. from K844m to K1.08bn over the same period, sup-
The Bank has, since its creation, been instrumental in ported by a strong retail loan book and sizeable in-
the development of the financial and banking indus- vestment securities that helped the Bank weather a
try. It introduced the first automated teller machines, challenging high interest rate environment. Interest
Visa debit cards and mobile banking in the country rates, which peaked towards the end of 2016 due
and has contributed significantly to the growth of fi- to a tight monetary policy impacted negatively on
nancial inclusion and industry growth, including ag- overall market lending which reduced 3% whilst non-
riculture. The Bank is listed on the Lusaka Stock Ex- performing loans grew by 5%. Zanaco’s loan book
change following its partial privatisation in 2007 and however, declined at a slower pace of 2% due to bor-
subsequent successful initial public offer in 2008. It rowing growth in the retail segment which showed a
is currently owned by Arise (46%), the Government lower demand elasticity to rising interest rates. The
of the Republic of Zambia (25%), Zambia National banks’ profits after tax grew 12% to K173m shy of an
Farmers Union (3%) with 26% held as publicly-listed industry growth average of 19% mainly as a result of
shares. Zanaco is a universal bank servicing close to transformation costs which included changes to the
1 million business and retail customers through a net- organization structure, staff rationalisation and pro-
work of 69 branches and over 700 agents across the cess optimization.
country. Total deposits exceed K6.9bn or about 15%
market share, with a loan book of K3.2bn or about OUTLOOK:
14% market share. The Zambian economy is expected to grow at a
slightly faster pace in the mid-term and reflects posi-
PERFORMANCE: tively for the banking sector’s prospects. Overall inter-
The year 2017 was an eventful one in the Zambia fi- est rates have declined from their peak in 2016 e.g.
nancial markets and particularly in the banking sector. the 364 Day Treasury bill has reduced from a peak
A slowdown in the country’s gross domestic product 27.5% to 16%. This has enabled a positive turn in
to 3.4% at the end of 2016 from a 2014 peak of 7.1% lending and Zanaco is well positioned to leverage a
caused by weak copper prices and an acute energy strong retail customer and deposit base and corpo-
deficit which set an overall bearish tone across the rate relationships to grow its loan and deposit books.
banking industry. A marginal uplift in the economy Transactional banking is also a lucrative opportunity
supported by monetary policy interventions through for business growth, particularly money transfers and
2017 resulted in the industry experiencing both tight- payments. In this regard the Bank has developed a
ening and expansionary regulatory actions over the strategic focus on digital banking solutions highlighted
period with shifting challenges. Zanaco’s business by the creation of a Digital Division in the Bank. The
performance however remained resilient in the face bank expects to exploit its wide geographic spread,
of economic headwinds as strategic initiatives bore infrastructure and large customer base to realise ex-
fruit. Total bank deposits grew 28% from K5.6bn in isting opportunities in this segment.
SHARE ANALYSIS 85
86 SHARE ARTICLE

The Importance of Seed Funds in Emerging Economies

Words by Jito Kayumba, Partner, Kukula Capital

Zambia, since its establishment as a Republic in record and collateral of value. This is understandable
1964, has been a beacon of peace and stability in when one ventures into the psyche of an investor.
Sub-Saharan Africa. This is an attribute that Zambi- Equity investors have two important expectations.
ans jealously guard in spite of numerous challenges, The first is not to lose any money. The second is to
including being landlocked, geographically placed earn a reasonable return on the risk. This means that
in the middle of numerous bordering countries who they first assess the downside risk before assess-
have been embroiled in civil and political strife. ing the upside. The methodologies of this appraisal
includes an analysis of historical, audited financial
A peaceful and stable environment makes for an ideal reports, a check on good governance, market evalu-
setting for investment and economic development. ation, validation of concept and the scalability of the
Unfortunately, poverty levels, unemployment and value proposition, among other elements. The un-
infrastructure deficits remain high. This, however, is fortunate reality is that start-ups are naturally unable
where the opportunity lies. Zambia has been almost to provide the requirements for appraisal. The other
entirely dependent on the extractive industry, with impediment to investment in start-ups is the statistical
copper and other metals being the country’s largest fact that over 80% of start-ups fail.
revenue earner.
In the last two decades, Zambia has seen a number
of private equity investments take place, with notable
The narrative is shifting as Zambia has evolved signif- ones such as Phatisa’s investment in Golden Lay,
icantly into a liberalised economy with an aggressive Oakfield’s Yalelo investment and Amatheon’s agri-
economic diversification agenda being promulgated cultural investments, among numerous others. What
by the government and has been well received by these deals have in common is that they exceeded
the private sector. In this regard, small and mid-sized $10m, the companies were not start-ups and the pri-
enterprises (SMEs) are increasingly seeking financial vate equity firms are domiciled outside Zambia. With
injection to scale up as well as integrate their respec- such activity, it gives way to an openness to look at
tive value chains. There is also a burgeoning start- SME investment below $10m as well as a reconfigu-
up entrepreneurship scene that is evidenced by the ration of investment guidelines to include greenfield
enormous attendance at various entrepreneurship projects with heavy risk-mitigation provisions.
fora such as the Nyamuka Zambia conference, the
Bongo hive launch accelerator events and other start- Kukula Capital, having had over seven years of expe-
up workshops. Banks and venture capital firms, such rience, investing in Zambia’s SME space, has noted
as Kukula Capital, receive a deluge of applications on the immense possibilities of start-up/seed investing.
a daily basis from start-up businesses seeking fund- There have been cases where seed investments
ing. The entrepreneurship spirit is undoubtedly palpa- have resulted in extraordinary returns. The risk cer-
ble and there is certainly, need to create investment tainly corresponds with the reward. These cases
provisions for start-ups and early stage SMEs with had a number of elements that reduced the risk sig-
low capitalisation requirements. nificantly. The first was that the seed investment fund
took majority stake – control of the business. This in-
Historically, Zambia has not been an environment volved meticulous market analysis, the establishment
where non-publicly listed asset classes have been of a strong management team to execute and the
acknowledged as viable vehicles to place funds for installation of sound corporate governance from day
a reasonable yield. The risk aversion of capital mar- one. The second was plugging into a sector where
ket players has restricted their placements to publicly there were supply chain deficits and opportunities for
listed equities, bonds, real estate and money market import substitution. In these cases, there was sector
instruments. This essentially meant that there was no validation and proof of market viability that further miti-
capital available for start-ups without a financial track gated risk.
 CAPITAL MARKET ARTICLE 87

There is much talk about opportunities in fast mov- point towards greater capital accessibility when they
ing consumer goods (FMCGs) that is driven by the revised their investment guidelines to include private
3% net annual population growth, urbanisation and equity.
infrastructure deficits. In every deficit, there is an op- With the advent of capital market support from DFIs
portunity and there are numerous that require solu- and NAPSA, as well as the growing track record of
tions. Import dependency is another, where a range private equity investment in Zambia, the time is ripe
of imported goods can be manufactured locally and for the provision of seed investment capital. The SME
marginally discounted as a result of not having any space in most industrialised economies is well sup-
import duty and logistical costs. ported through low interest rate debt financing and
seed capital availability. They are responsible for
Development Finance Institutions (DFIs) are playing creating a significant proportion of jobs and enabling
an active and crucial role in providing technical as- greater domestic tax revenue collection for the na-
sistance for entrepreneurship development as well as tional treasury. Seed funds are a necessity for frontier
funding entrepreneurs through venture funds. and emerging market growth. Entrepreneurs have
struggled long enough with the only commonly avail-
The National Pension Scheme Authority (NAPSA), able source of seed funding, the proverbial “three Fs,”
recently made an addition to the critical inflection Fools, Friends and Family.
88

Uwawa, taimina. (Bemba)

He who falls does not rise on his own.
Help someone who has problems, the interdependent
nature of Bemba society.
INSURANCE
Gross Written Premium (GWP) turnover increased by 18% in 2015

Overall penetration rates remain low at 5.5% of adult population

Motor insurance accounted for more than 40% of general insurance

90 INSURANCE ANALYSIS

Insurance
Creating Peace Of Mind
INTRODUCTION:
“Zambia was among the Risk is a guaranteed part of life everywhere. In- These figures show that the country’s population
first African countries to surance is a mechanism that allows one to gain still faces several risks that remain uncovered.
make insurance more in- peace of mind and focus on other things that are The 2015 FinScope Survey reported that 5.5% of
clusive by way of a multi- more important. Zambia was among the first Afri- the adult population had some sort of insurance
stakeholder coordination can countries to make insurance more inclusive by product in 2015, up from 4% in 2009.
structure.” way of a multi-stakeholder coordination structure. In terms of growth in the industry between 2014
However, the overall penetration rates remain low. and 2015, the overall increase of Gross Written
To increase uptake of insurance products, particu- Premium (GWP) turnover increased by 18%. In
larly by low-income households and the informal monetary terms, the GWP was K1.83bn in 2014
sector, thedevelopment of micro-insurance (MI) and this increased to K2.10bn in 2015. The Insur-
has been a priority area. ance Penetration Ratio (GWP to GDP ratio) was
0.67% in 2015 compared to 1.5% in 2014. The
SECTOR DEVELOPMENTS AND CURRENT GWP for general insurance stood at K1.38bn in
SITUATION: 2015, up from K1.21bn in 2014, while the GWP for
Although small, the insurance industry has stead- long-term insurance was K717m in 2015, which
ily grown over time; in 2016, there were 38 li- was up from K650m in 2014.
“The principal reason cited censed insurers and reinsurers compared to 2008 The principal reason cited by individuals who do
by individuals who do not when there were just twelve. The industry also not use insurance products was a lack of aware-
use insurance products has more than 300 licensed intermediaries and ness of the product, which indicates a clear need
was a lack of awareness of service providers. The insurance industry’s con- to educate the population about insurance. There
the product.” tribution to the national GDP was 1.1% in 2016, is also a need to continue to innovate and scale
up from 0.87% in 2015; this contribution is low in up appropriate insurance products adapted to
comparison to emerging markets’ average contri- the needs of low-income households and farm-
bution of 3%. ers. Product design features need to focus on
In 2016, the overall product mix showed that mo- improving customer experience and convenience
tor insurance businesses accounted for more (including the claims process) and lowering costs.
than 40% of the general insurance business un- Recent efforts made in this field are encouraging
derwritten. In terms of long-term insurance busi- and need to be expanded. Improved distribution
nesses, these were dominated by group life and channels and widespread digital transaction ac-
individual life insurance, which accounted for 62% counts will be critical to these efforts.
of the business underwritten. Funeral insurance
was reported by 33% of those with insurance, MICROINSURANCE (MI):
while medical and health insurance was reported In 2009, a diagnostic study was conducted and
by 25% and 17% of insured adults respectively. a multi-stakeholder technical advisory group was
 INSURANCE ANALYSIS 91

constituted to look at the development of MI. The protect your family, your business and all that is
technical advisory group was broadly represented important to you.
and included the association of insurers as well During the Week, all key stakeholders and other
as microfinance providers, the Government, the auxiliary market players used this action-evoking
Pensions and Insurance Authority and donors. theme in their various product exhibitions, insur-
The regulatory framework that was developed had ance education activities in schools, colleges and
a primary focus on product features, distribution markets, and in all other general campaign mes-
channels (with encouragement for non-traditional sages that were aimed at influencing people to
channels), consumer education and protection, take up insurance services.
training and accreditation, and dealing with as-
pects of bundled products, which were not sup- POLICY AND LEGISLATION:
ported in conventional MI models. However, the The country’s current medium-term development
framework was based on the themes of consumer plan (the Seventh National Development Plan or
protection and the MI agents’ code of conduct. 7NDP) has various strategies to the holistic ad-
However, MI has been associated with low mar- vancement of the country. One of the strategies is
gins that make direct sales costly and make it an for greater financial inclusion, within which insur-
unattractive business for brokers. The use of non- ance falls. Another strategy is to improve access
traditional distribution channels, such as mobile to finance for production and exports. According
network operators, has offered new opportunities to the 7NDP, this “strategy will focus on enhancing
for the insurance market. The number of MI poli- access to affordable finance for farmers, agri-busi-
cies grew from 200,000 in 2011 to more than 3 mil- ness MSMEs and exporters of high-value agricul-
lion in 2015, including insurance products distrib- tural products. Other interventions will include ac-
uted through mobile network operators, with the cess to finance for auxiliary services to production
number of insurers offering MI having increased and exports”. Furthermore, this strategy will focus
from five life insurers in 2012 to nine (including on enhancing capacities of established farmer
non-life insurers) in 2014. groups to participate in export markets, while cre-
ating a conducive environment for large exporters
CREATING AWARENESS: of crops, livestock, fish and forestry products to
Due to the low insurance penetration rate of below increase their export volumes. Of the programs to
6% and the industry’s low contribution to the GDP, meet this strategy, export financing and insurance
the industry introduced “The Insurance Week” as promotion are pertinent to the insurance industry.
a consumer education tool in an effort to increase Other official documents pertaining to the insur-
the uptake of insurance by the Zambian popula- ance sector are the National Financial Sector De-
tion. The Insurance Week was conceptualised velopment Policy (NFSDP), the National Financial
and put into effect in 2013, which has received Inclusion Strategy (NFIS) and the Insurance Act
the support of all players in the country’s insur- (Cap 392). Globally, the financial sector has been
ance market. The two core objectives of this Week recognised as a facilitator of economic growth and
are to highlight the importance of insurance and development. A well-structured financial sector
display the insurance products that are available has generally been positively associated with fi-
in the country. Since its inception, the Week has nancial sector efficiencies that affect all other sec-
expanded in geographical coverage and activities tors of the economy. In addition, financial inclusion
from two provinces up to ten provinces in 2016 has been shown to have several positive effects
with the two key objectives being maintained. The on alleviating poverty, the development of the pri-
2017 theme was Insure Now: Protect You and vate sector and stability in the financial sector. It
Yours! After five years of reaching out, the year’s has been found that by reducing vulnerability to
theme was a call to action for the general popula- economic shocks, financial inclusion has the po-
tion to take progressive action in getting insured. tential to be a key driver of poverty alleviation. In-
There were three messages that complimented clusive financial systems can provide low-income
this theme, which was: adults with the tools to borrow, save, make pay-
- Insure Now: Take a decisive step now towards ments and manage risks. This, in turn, facilitates
getting an insurance policy; now is better than consumption smoothing and lessens the impacts
later; of unexpected reductions in income that are com-
- Protect You: Insurance will give you peace of mon among those in the informal sector.
mind and transfers your risks to the experts and Within this context, the NFIS defines financial in-
- Protect Yours: When you get insurance, you clusion as the “access to and informed usage of
92 INSURANCE ANALYSIS

a broad range of quality and affordable savings, major gaps in the sector that require a policy re-
credit, payment, insurance, and investment prod- sponse are market demand for greater transpar-
ucts and services that meet the needs of individu- ency, low financial literacy, low capitalisation of
als and businesses”. industry players, an absence of legal provisions
The NFIS is a renewed commitment by the Gov- on local retention, limited mandatory insurance
ernment to enhance financial inclusion in Zam- to cover public-liability risks, low levels of innova-
“The NFIS is a renewed bia and it builds on previous efforts and ongoing tion in the design of products and poor distribu-
commitment by the Gov- initiatives. Zambia’s vision for financial inclusion tion channels. This has contributed to significant
ernment to enhance finan- is for its people to have universal access to and fronting of risks by way of reinsurance to offshore
cial inclusion in Zambia and usage of a broad range of quality and affordable companies, thus reducing resources that could be
it builds on previous efforts financial products and services. This vision would retained locally for economic development.
and ongoing initiatives.” have reached its conclusion once all Zambians In terms of observed gaps in delivery channels,
can reap the full benefits of financial inclusion. digitalised delivery channels, especially for MI,
This means that individuals would be able to use are non-existent with the underlying issue being
appropriate savings, credit, payment, insurance that there are limited distribution channels for in-
and investment services in order to manage risks, surance products. Regarding observed gaps for
plan for the future and achieve their goals, while products and services for individuals, there is a
firms would be able to have access to affordable low uptake of insurance and investment products,
financing to facilitate innovation, growth and cre- with an underlying issue recognised as the lack of
ate employment. regulations for MI. Observed gaps for SMEs and
The Pensions and Insurance Authority (PIA) is the agricultural finance include the poor provision of
authority that oversees the insurance industry. Its non-credit services, which includes insurance.
mission is to regulate the conduct of players in the A diagnostic study on consumer protection/finan-
pension and insurance industry through prudential cial capability identified gaps in the existing legal
supervision. This is in order to protect the inter- and institutional framework for consumer protec-
ests of insurance policyholders and to foster the tion. It found that the industry was characterised
industry’s growth, development and stability. By by overlapping jurisdictions and sector-specific
law, all insurance players in Zambia are required laws currently have limited provisions related to
to be licensed annually by the PIA before trans- consumer protection. While drafts of new sector
acting any insurance business activities. The PIA laws contain more comprehensive provisions,
also conducts consumer awareness and handles these bills have not yet been passed. In addition,
consumer complaints. overlapping mandates exist between financial
Besides the Insurance Act, other important docu- regulators (Bank of Zambia, the PIA and the Secu-
ments for players in the industry include: rities and Exchange Commission) and the Com-
• Fit and Proper Test Guidelines for Licensed petition and Consumer Protection Commission;
Entities in the Insurance Sector; this complicates implementation of meaningful
• Insurance Agents Minimum Requirements; consumer protection measures. Furthermore, the
• Claims Agents Minimum Requirements; provision of mobile and digital financial services
• Brokers Minimum Requirements; and requires that financial sector regulators collabo-
• Insurance Minimum Licence Requirements. rate with the Zambia Information and Communi-
cations Technology Authority on consumer pro-
CHALLENGES AND FUTURE DEVELOP- tection. In addition, there is a need for regulators
MENTS: to have dedicated functions for market conduct
The insurance industry is lobbying for an insur- supervision, which is currently being done along-
ance bill, as the one that the industry is operat- side prudential supervision. Moreover, consumer
ing from is outdated and a revised bill will address protection rules need to not only be enhanced,
some of the problems in the market. The Minister but also monitored closely and enforced. Among
of Finance has given assurance to some actors the key gaps in the current consumer protection
that a new bill will be tabled in parliament. Adap- regime are disclosure and transparency, dispute
tations to the regulatory framework are important resolution and business practices.
for promoting inclusive insurance, which includes One of the drivers towards an inclusive financial
lower capital requirements for micro-insurers. The system, which relates to the insurance industry, is
 INSURANCE ANALYSIS 93

the creation of diverse, innovative, customer-cen- opment and certification of insurance prac-
tric products. Policy objectives under this driver titioners through the Insurance Institute of
include the following: Zambia (IIZA); and
• Reduce documentation barriers to product • Amend insurance regulations to lower capital
uptake and usage; requirements for micro-insurers. The targets
• Simplify products using customer-centric de- for 2022 states that 10% of adults should
sign (customer-oriented designs); have at least one insurance product, while
• Expand supply of MI and micro-pension prod- 15% of adults should have at least one non-
ucts; and mandatory insurance product.
• Improve quality and availability of financial
products and services for women, youth and CONCLUSION:
rural residents. The industry has experienced many changes that
A series of actions have been outlined to close the have allowed the industry to grow and develop.
identified gaps. Both the public and private sectors This includes the advancements in the provision
play a key role in implementing the action plan; of MI and, creating awareness on why insurance
although it is ultimately the private sector that will is necessary and the different insurance products
drive financial inclusion in Zambia. The objective that are available. While there are still challenges
of expanding the supply of insurance products has that are being faced, the industry is continually ex-
the following required actions: periencing growth and will continue to do so as
• Formulate a strategy for professional devel- a large proportion of the population is uninsured.
94

Sato sakufa mbasikaula ngombe. (Lozi / Luyana)

A broken canoe will buy a cow.
Look after other people’s property as damaging it may cost you
a fortune in compensation.
INDUSTRY & MANUFACTURING
Goods manufactured in Zambia acccount for a quarter of exports

Free Trade Agreements guarantee duty-free access to 25 markets

Country’s multi-facility economic zones and industrial parks record growth

Income growth paves the way for increased demand for processed foods
96 INDUSTRY ANALYSIS

Made in Zambia
Towards a Well Diversified Manufacturing Sector
As with many of its SADC neighbours Zambia’s struction sectors. During the first quarter of 2017,
economy has been developing towards a more Zambia Development Agency (ZDA) recorded a
value-added model. Various factors, however 20% increase in FDI compared to the same period
have so far limited the pace of the needed reforms in 2015 with the manufacturing sector accounting
and the country still lags behind its potential, de- for the third steepest growth in the country follow-
spite the beneficial trade agreements between the ing the energy and agriculture sectors. The com-
SADC and COMESA communities. bined industrial sector, which included categories
of mining and quarrying, construction, manufac-
Zambia, after a difficult 2015 and 2016 recorded turing and utilities like electricity, gas and water,
a trade surplus of K410.60m ($42.49m) in July of accounted for 35.4% of the GDP in 2015, down
2017. The Balance of Trade in Zambia averaged from 36.6% in 2011. This decrease can partially
-K17.14m from 2003 until 2017, reaching an all- be ascribed to the copper crisis in 2015, which
time high of K1,484m in January of 2011 and a saw a 2.9% decline in mining and quarrying activ-
record low of -K2,678m in October of 2015. ity due to reduced copper prices globally.

ECONOMY ON A REBOUND: Growth in the sector was largely attributed to the

The Zambian economy rebounded in 2017. Fol- food processing, textiles, and leather subsectors.
lowing a positive economic performance during Metals processing remains another significant in-
the first quarter of 2017, S&P Global Ratings up- dustrial activity including the smelting and refining
graded the Zambian outlook from negative to sta- of copper. Fertilizers, chemicals, explosives, wood
ble. Copper exports contributed positively to the products and construction materials also contrib-
country’s trade surplus. Copper prices were high- ute to the list of products manufactured in Zambia.
er in the first half of 2017, compared to the same
period in 2016 as demand for metals grew again The manufacturing sector has attracted significant
on the global markets, particularly due to the re- inflows in FDI as the Government of Zambia con-
vived demand in China and strikes in Peru, Chile tinued to support the sector with attractive incen-
and Indonesia that decreased the supply globally. tives and extension of its Multi-Facility Economic
It is estimated that global copper output reduced Zones. Manufactured goods from Zambia account
by 5-7% in the first quarter of 2017. for 25% of the country’s total exports and amongst
“The Government of Zam- others, are engineering products, processed and
bia continued to support KEY NUMBERS: refined foods, chemical and pharmaceutical prod-
the sector with attractive The manufacturing sector accounted for approxi- ucts, scrap metal and leather products. Zambia’s
incentives and extension of mately 8% of Zambia’s GDP in 2016 and was one manufactured products are further exported to
its Multi-Facility Economic of Zambia’s key drivers of growth together with SADC and COMESA markets with South Africa
Zones.” mining, wholesale and retail trade, and the con- and the Democratic Republic of Congo as its main
 MANUFACTURING ANALYSIS 97

destinations. China, Belgium, the Netherlands Engineering products have a ready local market
and Switzerland are the most important Zambian mostly from the mines and the growing construc-
export partners outside Africa. tion industry in the country. Zambian manufac-
turers have been able to address local demand
DUTY FREE ACCESS: by producing window frames, doors, roofing ma-
Zambia is privy to preferential market access to terials, nuts, bolts, and various light engineering
many key markets. As a member of the Common products. However, a gap exists in supply of spare
Market for East and Southern Africa (COMESA) parts for various industrial machines as Zambia
the country is part of a Customs Union and the currently imports all major spare components from
Free Trade Area of SADC. Zambia is also a bene- abroad.
ficiary under the African Growth Opportunities Act
(AGOA) and the EU Everything But Arms (EBA) MFEZs: “Foreign-owned firms en-
programme. Given the current regional integra- Zambian Multi-Facility Economic Zones (MFEZs) joy the same investment
tion agenda under both COMESA and SADC, were first established under the auspices of the opportunities in Foreign
and the tripartite Free Trade Agreement (FTA) Triangle of Hope (ToH) initiative, introduced in Trade Zones.”
between the two blocs and the East African Eco- 2005 by the Japan International Corporation
nomic Community (EAC), it can be anticipated Agency (JICA) to improve Zambia’s industrializa-
that intra-regional trade will be enhanced both tion and attractiveness as an investment destina-
through intra-industry as well as inter-industry tion. In early 2007, the government announced
trade. Through the free trade agreements within the creation of MFEZ in which investors enjoy
COMESA and SADC regions Zambia has access waivers on customs duty on imported equipment,
to 25 national markets within Southern and East- excise duty and value added tax, among other
ern Africa. concessions. There are six MFEZs and/or Indus-
trial Parks currently operating: Lumwana, Cham-
COMESA established a customs union in June bishi MFEZ on the Copperbelt – including its ex-
2009, during the 13th Summit of the COMESA tension, the Lusaka East MFEZ – and the Lusaka
Heads of State and Government. The SADC South MFEZ and two Industrial Parks – Ndola
Trade Protocol promotes regional integration (Sub-Saharan gemstones exchange) and Roma.
through trade development and develops natural Foreign-owned firms enjoy the same investment
and human resources for the mutual benefit of opportunities in Foreign Trade Zones. An investor,
their people. Trade among SADC member states foreign or local, is free to identify and suggest any
is conducted on reciprocal preferential terms. other location in the country deemed economical
Rules of Origin define the conditions for products for development of a multi-facility economic zone,
to qualify for preferential trade in the SADC re- although Government has prioritized designated
gion. Products have to be “wholly produced” or areas in Lusaka, Ndola, Mpulungu, Chembe, Na-
“sufficiently processed” in the SADC region to be konde, Kasumbalesa and Mwinilunga. Zambia
considered compliant with the SADC Rules of Ori- has continuously encouraged investors to provide
gin. The SADC and COMESA Rules of Origin are local employment and skills transfer to local en-
product specific and not generic. trepreneurs and communities. Foreign companies
operating in MFEZ are strongly encouraged to
METALS PROCESSING: utilize local raw materials and intermediate goods
There is scope for investment in the manufacture and engage in technology transfer to qualify to op-
of copper wire and other copper products, such as erate in MFEZ.
copper plate and tubing, and for increased cop-
per rod and cables manufacturing activities, which Lusaka South MFEZ has over 2,100 hectares of
are already being undertaken in Zambia and ac- serviced land available for different forms of de-
count for a significant proportion of Zambia’s non- velopment Lusaka South MFEZ is looking to at-
traditional exports. Government incentives sup- tract investors with wide business interests. The
port new businesses that process copper rather Lusaka South MFEZ whose Master Plan was
than exporting the raw copper. Zambia currently developed by Kulim Hi Tech Cooperation of Ma-
exports a variety of minerals in raw form. Numer- laysia, the Japanese Experts and the Local Ex-
ous companies have benefited from the existing pert Team will house a variety of industries and
investment opportunity in processing copper, iron facilities: high tech industries, research and de-
ore and steel, cobalt and other minerals into in- velopment, commercial, residential, golf course,
termediate and finished engineering products. institutions and community facilities. The number
98 INDUSTRY ANALYSIS

of expressions of interest to invest in the zone worth of investments have been committed, and
has already reached over 200 from both local and over 207 local jobs have been generated.
foreign firms. In early 2017 a new malting plant Lumwana:
for Zambian Breweries and a manufacturing plant The Lumwana MFEZ, developed by Lumwana
for NRB Pharma were commissioned within the Property Development Company Ltd is a 1,300
MFEZ with ZESCO, Mylan, Zambia Fertilizer, and km² area focusing on light and heavy industries.
American Tobacco also beginning works on the The MFEZ houses manufacturing of explosives,
premises. agro-processing, horticulture, fisheries, and com-
mercial products. The developers of this MFEZ
Chambishi MFEZ: have prepared a Master Plan and plan to invest
The development of the Chambishi MFEZ (CM- $1.2bn for development of the MFEZ whilst cre-
FEZ) is being undertaken by China Non-Ferrous ating 13,000 jobs. The Management of Lumwana
Metal Mining Company Limited (CNMC) and is MFEZ has engaged experts to assist in develop-
one of the first investments resulting from the ing the MFEZ.
Forum on China-Africa Cooperation (FOCAC) in
2006. Zambia was selected as the first African Sub Saharan Gemstone Exchange Industrial
country to benefit from investment from China in Park:
a form of trade and economic zone. The CMFEZ The Industrial Park is situated in Ndola on a 100
has made substantial progress over the years. So hectare piece of land on the Kabwe – Ndola
far, over 14 km of main roads have been tarred Road. The property enjoys developed premises
and linked up, and a 330 kV substation, 66 kV and previously owned by Ndola Precious Metals. The
10 kV transmission lines, water supply with bore developers of the Industrial Park have already
hole and rainwater drainage and sewage drain- invested $8m in rehabilitating infrastructure and
age have been completed. Internet access is also have so far attracted three enterprises engaged in
available, and a multi-functional facility of 5,000 m2 manufacturing and processing activities. It is esti-
with offices, meeting room, exhibition hall, inter- mated that more than 20 companies will be in the
net and financial banking services is operational. Industrial Park with projected employment levels
A dozen standard workshops include two types: estimated at 4,000 employees.
1550 m2 (with office) and 1,080 m2 are completed.
The zone also has a Sino-Zam Friendship Hospi- Roma Industrial Park:
tal, which offers comprehensive medical service The Roma Industrial Park is situated in Lusaka on
to the zone staff and local citizens. The hospital a 113 hectare piece of land along Zambezi Road
has experienced doctors and quality medical facil- after the Roma residential area. The main promot-
ities, such as MRI and Laparoscopy System, etc. er of the industrial park is CPD Investment Limited
which is owned by Interspan Sales Corporation,
The CMFEZ has 48 firms operational, generating a South African Company. The Industrial Park is
accumulated investments of $1.3bn , and about looking to light industries, retail park, office park,
8,211 jobs. The investors are mostly from the min- warehousing and will also promote local business
ing, copper smelt, equipment assembling, con- development through the creation of an incubator
struction, agro processing, and services. for Micro Small and Medium Enterprises. The total
project cost is estimated at $46m with projected
Lusaka East MFEZ: employment levels estimated at 2,800 employees.
The Zambia-China Economic & Trade Coopera- The developers of the Park are currently working
tion Zone (ZCCZ) has almost completed phase I, on infrastructure development and many investors
including over 10 km main roads, a 10 kV power have expressed their willingness to invest in the
substation, underground drilling work, dozens of area.
standard workshops of two types: 1,550 m2 (with
office) and 1,080 m2, six residential buildings, and CEMENTED GROWTH:
other urban amenities. The construction sector in Zambia has shown
So far, the zone has approved 14 investment pro- impressive growth due to the property market ex-
jects and 8 are operational. The companies are pansion in the recent years and this has resulted
active in agro-processing, pharmaceutical, bever- in a notable increase in cement consumption. The
ages, energy and logistics sectors. About $20m market is highly competitive with 14 cement pro-
 MANUFACTURING ANALYSIS 99

ducers present, with Dangote Quarries Zambia ness globally by AB InBev, including the Zambi-
Limited, Lafarge Zambia, and Zambezi Portland an subsidiary Zambian Breweries Plc, AB InBev
Cement making a visible contribution to the con- solidified its position in the global beer market.
struction market; collectively producing 1,956,519 These changes resulted in Zambian Breweries
metric tons of cement in 2016. decision to sell 70% of its shares in its subsidiaries
National Breweries, which produces opaque beer
The subsector saw major developments in 2015 brand Chibuku and Heinrich`s Syndicate Limited,
when Dangote Quarries made an entry in the which produces super maheu and non-alcoholic
Zambian market and ended the near monopoly flavoured maize drinks.
of the French manufacturer Lafarge triggered re-
duced cement prices in the process. OFFERED INCENTIVES:
The first quarter of 2017 saw decreased market Zambia offers numerous incentives to support in-
activity due to unfavourable weather conditions vestment in the manufacturing sector. Investors
causing domestic demand to fall by 14%. The who invest not less than $500,000 in the MFEZ,
market is expected to benefit from the improved an Industrial Park, a Priority Sector (agriculture,
performance in Zambia’s construction sector for manufacturing, tourism, mining) and invest in a ru-
the rest of 2017. ral enterprise, following the framework of the ZDA
Act are entitled to fiscal incentives. These include
FOOD AND BEVERAGE INDUSTRY: (i) Zero percent tax rate on dividends for 5 years
The potential for agro-processing and industrial from first year of commencement of operations,
development in Zambia is largely associated with (ii) Zero percent tax rate on profits for 5 years
the relative abundance of agricultural raw mate- from the first year of operation. Qualifying projects
rials and low-cost labour. The medium-term pro- should be carried out in the Manufacturing sector
jected outlook for the Zambian food and beverage in an Industrial Park, MFEZ or Rural Area),
subsector remains positive. Strong signs of recov- (iii) Zero percent import-duty rate on capital equip-
ery were shown in 2017 after stagnation in 2015 ment and machinery for five years.
and 2016. This was due to improved consumer
spending and the general economic recovery. Different corporate tax rates are applied to pro-
High-end consumers comprise the major portion ducers of organic or chemical fertilizers (15%) and
of consumer spending with the wealthiest 20% of agro-processing companies (10%). Also, compa-
the Zambian population forecast to account for nies importing industrial machinery may claim
72.3% of the total income in 2021, according to 50% in capital allowance.
BMI. Non-alcoholic beverages sales are projected
to grow by 9.9% in 2017 and at a compound annu- AGRICULTURAL EQUIPMENT:
al growth rate (CAGR) of 11% from 2016 to 2021. The Industrial Development Corporation, invest-
ment company wholly owned by the Zambian
Alcoholic drinks consumption in Zambia grew by Government signed an agreement with Ursus
2.7% in 2017 and at a CAGR of 2.7% from 2016 S.A., a Polish company to construct a tractor
to 2021. Beer consumption is also widespread in and agricultural equipment assembly plant at the
Zambia. The local market is dominated by Zam- Lusaka South MFEZ in 2017 for the delivery of
bian Breweries Plc which has a market share of 2,694 units of tractors and 2,509 units of agricul-
approximately 90% of clear beer production. The ture machinery with implements and spare parts.
government of Zambia reduced the excise duty The plant will assemble 10,000 units annually and
on clear beer from 60% to 40% in 2017 therefore export tractors and other agricultural equipment to
encouraging further investment in the subsector. the Southern African region. Ursus Zambia will
create 400 jobs in 10 service centres across the
Following the global takeover of SABMiller busi- country and 300 direct jobs at the plant.
100 INDUSTRY ANALYSIS

CHALLENGES:
“The growing demand Despite attractive fiscal incentives and access Zambia an advantage over some of its regioal
for processed foods and to a large workforce, Zambia has only recently neighbours enabling it to expand its export base
household products gives started to attract more investment into industry and thereby representing an attractive investment
Zambia an advantage over subsectors other than mining. Certain shortcom- opportunity. Incentivising local manufacturers will
some of its regional ings characterise the sector including low levels make Zambia more competitive globally. Domesti-
neighbours.” of advanced technologies, weaker innovative ca- cally produced commodities should have stronger
pacity and lower human capital threshold in local competitive power than imported commodities
firms. The agro-processing sector experiences and they should be exported to the neighboring
the most challenges in the sector, which continues countries in the second stage. Industrialisation of
to deprive Zambia of benefits associated with in- its manufacturing sector will make it possible to
creased industrialization. The growing demand for export Zambian produce.
processed foods and household products gives
MANUFACTURING ANALYSIS 101
102 INDUSTRY ARTICLE

The Success Story of Trade Kings

The Odyssey of a Homegrown FMCG Collosus

His Excellency, the President, in his electoral cardinal apostles, thereby living up to its signature
agenda declared that 1 million sustainable, mean- line, “Improving Lives”.
ingful jobs would be created by 2021. The achiev-
ability of this ambitious statement was a manifes- Trade Kings Group’s product range has been em-
tation of the following beacons: braced by the Zambian populace, in view of its
impeccable quality, which matches or surpasses
• Industrialisation and mechanisation of the international standards, consistent supplies, to
agro sector, cater to the ever-growing appetite, for its prod-
• Movers and shakers of the global industry to uct range and predominantly, affordability to the
establish value-add products and services in masses. This hallmark has contributed to the do-
Zambia, mestic economy in many ways.
• Establish educational institutions to up-skill
re-skill and re-engineer the Zambian work- Today, the Trade Kings Group directly and indi-
force and technical institutes to promote pro- rectly employs over 5,000 people and actively
fessional vocational training, promotes its Corporate Social Responsibility ini-
• Seamless flow of foreign exchange in and tiatives through various health, education, women
out of the country with no restrictions thereby empowerment, and upskill/re-skill of youth pro-
wooing FDIs into the country, grammes. The Group plays an important role in the
• Sovereign protection of foreign investments manufacturing and agricultural sectors by value
under the auspices of the Zambian Develop- addition to the Zambian agricultural commodities
ment Agency Act, like potato, sugar, maize, and corn, converting the
• Multi-ethnicity of over 70 local tribes, thriving raw produce into chips, confectionery, beverages,
in peaceful coexistence, to be found nowhere biscuits and maheu. It also collaborates, through
else in Africa. a “collective out-grower scheme”, thereby uplifting
the local farmers. Trade Kings has effectively de-
Given this scenario, there are a few salient takea- veloped cross border trade with its neighbouring
ways that could lure potential investors. Zambia countries that benefit from Zambia’s unique geo-
enjoys political stability supported by a long-term graphical position, contributing to the country’s ex-
ambitious political-economic vision. The Govern- port earnings, and substituting imports that save
ment has established economic zones that pro- Zambia’s valuable foreign exchange. Apart from
vide ample tax incentives and “one stop shops” being the biggest home–grown FMCG company
for nurturing green field industrial projects thereby in Zambia, Trade Kings Group has successfully
curbing the bureaucratic processes. Vast invest- executed a backward integration venture by its
ment opportunities exist in renewable energy pro- Group Company, Universal Mining and Chemical
jects, technical knowledge transfer and there is an Industries Limited (UMCIL) which converts min-
abundant scope for expansion in the railway sec- eral iron ore to steel products using the cutting-
tor. One of the Government’s priority sectors – ag- edge technology DRI (Direct Reduction Iron) this
riculture offers untapped greener pastures in the demonstrates it’s value addition to the country’s
agro-processing sector with a tendency inclined iron ore mineral reserves.
towards value addition. The investor will also ap-
preciate free flow of foreign exchange and numer- The Group is poised for a quantum leap in the next
ous incentives in various other sectors. 2-5 years. The overall vision that backed this, was
Zambia is at its pinnacle of welcoming the interna- based on some cardinal tenets, any expansion will
tional community to establish industrial ventures primarily be organic, expansion will be lateral, or
which add value, provide employment, packaged backward-integration driven enterprise and there
with the least bureaucracy, to the FDIs. Trade will be no paradigm shift in basic finished product
Kings Group has been a strong advocate to these ranges.
 MANUFACTURING ARTICLE 103

Given these fundamentals, the overall vision is to

remain the market leader in the current domains,
capture newer markets and focus on agro-based
backward-integration projects. As a Group, Trade
Kings plans to scale up their production efficien-
cies to increase output and tilt their processes to-
wards being system driven. Robust cost control
measures have been introduced to improve the
bottom line and the company is actively seeking to
foray into newer geographies to boost the top line.
The Group is proud of it’s strict adherence to cor-
porate governance and budgetary norms. Their
CSR initiatives have been proudly publicised, with
a view to spreading this gospel, to the rest of the
corporate community. The diversification of the
steel vertical product range is also an integral part
of the company’s medium-term vision.

On the international arena, the Group will focus

on setting up manufacturing facilities in the Sub-
Saharan region. Eyes have been set on the con-
fectionery and beverage product range.

The future projects on the anvil have been carved

out and are currently awaiting the shareholders’
approval, which is expected to go under the ham-
mer, before the end of 2017.
104 INDUSTRY ARTICLE

The Success Story of ZAMEFA

Wiring the Nation
The Metal Fabricators of Zambia Plc. (ZAMEFA) The Company continues to hold full certifications
was incorporated in 1968 and listed on the Lu- for ISO 9001 (for quality management system),
saka Stock Exchange (LuSE) in September 2004. ISO 14001 (for environmental management sys-
The company’s head office is in Luanshya in the tem) and ISO 18001 (for occupational health and
Copperbelt Province of Zambia and has a sales safety management system). Additionally, the
and distribution centre in Lusaka. Since 2016, the Company continues to hold the South African Bu-
majority shareholder and ultimate parent compa- reau of Standards (SABS) and Zambia Bureau
ny (with 75% of shares) is Reunert International of Standards (ZABS) permits for its range of low-
Investments Ltd (RIIL) incorporated in Mauritius, voltage power distribution cables.
who manage a portfolio of businesses in the fields
of electrical engineering, ICT and applied elec- ZAMEFA has a unique processing structure and
tronics. RIIL is a wholly-owned subsidiary of Re- is able to process copper cathodes as a raw in-
unert Ltd incorporated in South Africa and listed put material and thereafter produce cables as
on the Johannesburg Stock Exchange. a finished product. Since we are situated in the
Copperbelt, we are guaranteed of the best Zam-
As the company’s name suggests, ZAMEFA is bia copper cathode supplies for our cable produc-
a metal fabrication business that has the exper- tion programmes. This position enables ZAMEFA
tise to manufacture and supply a comprehensive to take advantage of adjusting its manufacturing
range of top-quality products as displayed in the programmes at short notice to suit its customers’
table below. requirements.

ZAMEFA Product Range: However, in partnership with the Reunert’s group

of companies, their business offerings include
- Low voltage PVC/XLPE insulated cable products and services in electrical engineering,
99.9% copper casted rod ICT and applied electronics. This partnership
Building wire works because of a common ethos of delivering
- Medium voltage paper-insulated cable quality products and services.
Medium voltage XLPE
Copper shapes The company has a board of directors and an ex-
- High voltage XLPE insulated cable ecutive management team. The Managing Direc-
Telecom cables tor (MD) is Mrs Roseta Chabala, Mr P.W. de Vil-
ACSR liers is the General Manager of Africa Operations
- Aerial Bundled Conductor (ABC) and Mr G.J.H. Steyn is the Head of Administration
Flexible wire of Africa Operations.
 MANUFACTURING ARTICLE 105

On the 26th of August 2016, RIIL bought ZAMEFA and less valuable cheap imports from India and
when the General Cable Corporation disposed of China, which are made from a mixture of copper
its ZAMEFA shares. The MD stated that the new and other metals. ZAMEFA is now targeting the
owners of ZAMEFA had not expressed any inten- Eastern and Central African markets, where busi-
tions to change the company’s management and ness has grown over 200% in the last two years
workforce. The ZAMEFA’s Board of Directors in- as its products are well received due to their high
formed its shareholders that the company would quality.
change its financial year-end from the 31st of
December to the 30th of September with effect Gross margins reduced by 1% to 8% in 2017,
from the 30th of September 2016. The change largely as a result of a change in sales mix. Profit
of the financial year-end was to align the finan- before tax in 2017 improved by K18m as com-
cial year-end of ZAMEFA with that of RIIL. Thus, pared to 2016, despite a 1% reduction in margins.
the Income Statement for 2016 covered a period This was mainly due to savings in operating ex-
of nine months, while 2017 was a full year. In re- penses. Group earnings per share were K0.89
spect of the year ended 30th of September 2017, (K0.32 in 2016). The Group obtained a long-term
shareholders were notified that the company’s An- loan of $20m from the parent company. This loan
nual General Meeting would be held on Tuesday will allow ZAMEFA to embark on an ambitious ex-
the 12th of December 2017. Shareholders are no- pansion programme. A part of the expansion pro-
tified about such events through the media and gramme is a new wire and cable manufacturing
the LuSE website. Other notifications are issued plant that will see production capacity double.
through the LuSE website. RIIL made a Mandatory Offer to buy out the mi-
The operating profit for the 2017 financial year was nority shareholders of ZAMEFA, which opened
K54m higher as compared to the 9-month period on the 31st of July 2017 and closed on the 14th
in 2016. This increase was mainly due to the high- of August 2017. RIIL increased its total share-
er gross profit that resulted from increased sales holding in ZAMEFA from 75.39% to 79.62% (up
and lower operating expenses in 2017. Operating 4.23%). RIIL promptly sold these shares bought
expenses in 2017 were lower than those incurred in the Mandatory Offer, and a further 0.39% of its
in 2016 largely due to a substantial increase in the original shareholdings, to selected Zambian insti-
provision for doubtful debtors, which was not re- tutional investors. This reduced RIIL’s sharehold-
peated in the 2017 financial year. ZAMEFA’s oper- ing in ZAMEFA to 75%; thus making the Company
ating environment continued to be characterised fully compliant with the LuSE minimum free float
by tight liquidity in the local market. The Group requirements under the LuSE Listings Rules. It
continues to focus on strategies to grow its share was noted that the vast majority of the ZAMEFA
of exports. shareholders opted to hold on to their ZAMEFA
shares. The ZAMEFA Board and management
Although business is competitive, there is great wish to acknowledge this overwhelming vote of
potential for growth due to an increasing demand support from the shareholders, which demon-
for it’s high-quality 100% copper wires and cables, strates their confidence in the future prospects of
which are of a better quality than the less durable the company.
106 INDUSTRY INTERVIEW

Uplifting Local Manufacturing through Incentives

Mukela Lubasi, Acting Managing Director, Lusaka South Multi-Facility Economic Zone

BRIG: How can Zambia make itself more

competitive internationally?

Mukela Lubasi:
Incentives undoubtedly play an important role in and upgrading the country’s airports and road net-
attracting investment in any MFEZ. Zambia must work.
distinguish itself by clarity of regulations and pol-
icy framework. The country should especially fo- We are also seeing a shift in interest from compa-
cus on the ease of doing business and support nies in China and other Asian markets and Euro-
that is offered to the investors. We must make it pean entities.
easier to get the necessary approvals in record
time. At the LS – MFEZ, we work closely with the BRIG: Which industries show the most promising
Zambia Development Agency and the Ministry of signs of growth, especially within LS-MFEZ?
Commerce, Trade and Industry to create an effec-
tive one-stop-shop to process the approvals. Also, Mukela Lubasi:
the Government should encourage local procure- The current administration of Zambia has put a
ment of raw materials so that the FDI in Zambia strong focus on stimulating the economy through
has long-term multiplying effects and the local diversification of its main sectors. The LS-MFEZ
skills market is enhanced. was established to deepen Zambia’s industriali-
sation and manufacturing capacity and since its
Zambia has eight neighbouring countries and has inception in 2012 has attracted 26 local and in-
the right mix of incentives, transport infrastructure ternational players with two companies already
and regulatory framework for the investors to ben- operating on the premises, with another seven
efit from the export opportunities in the SADC and commenced operations in 2017. One of the most
COMESA regions. Centrally located, and being attractive angles is the uniqueness of the facili-
economically and politically stable, Zambia has ties at LS-MFEZ. We have over 316 hectares that
already shown the ability to attract entrepreneurs have been allocated for industrial and residential
away from some of its regional competitors who development in the Zone, with the total designat-
were persuaded by Zambia’s competitive advan- ed area of 2,100 hectares available for industrial,
tages. The Government is putting much emphasis commercial, research and development, housing,
on infrastructure development, also through pub- institutional operations, parks and areas for mixed
lic-private partnerships, including the construction -use development.
 MANUFACTURING INTERVIEW 107

The Zambian economy has many strengths, but

one area we must focus on is value addition. The
two sectors that I personally see developing rap-
idly are agricultural processing and pharmaceuti-
cals. One of our clients located within LS-MFEZ is
RMB Pharma which produces 50 products for the
local market and is planning to export its produc-
tion across the SADC region.

Agriculture is one of the four sectors that the cur-

rent administration has prioritized to transform
Zambia from a single-sector economy to a diversi-
fied industrialised economy with Zambian Brewer-
ies and British American Tobacco being two of the
success stories here at LS-MFEZ by creating links
between local industries and export markets.

We are also targeting local investors as we believe

that the local tax payers should be able to par-
ticipate and set up their businesses in the MFEZ.
Recently, LS-MFEZ has paired up with Copperbelt
Energy Corporation to put up a number of shelf
factories to accommodate smaller manufacturing
and processing businesses with limited resources.

BRIG: What impact would increased investment

have on opportunities in the Zambian market?

Mukela Lubasi:
The four priority areas of economic diversification
efforts are in manufacturing, agriculture, tourism
and mining. The latter – mining sector – has been
the driver of Zambian economy since independ-
ence and currently, the Government is focusing on
encouraging value addition in the sector. A steady
and well-rounded investment in these sectors will
have immeasurable multiplier effects.

Increased job creation, opportunities for the local

raw material manufacturers and service providers,
and a changing skills market are some of the long
-term associated outcomes of a diversified Zam-
bian market.
108 INDUSTRY INTERVIEW

Focus on Value Addition

Roseta Chilufya Chabala, CEO, ZAMEFA

BRIG: How do you evaluate the outlook for the BRIG: What are the challenges for a Zambian
Zambia manufacturing sector and the efforts and company to export into the SADC region?
synergy between government and the private sec-
tor stimulate the economy?

Roseta Chilufya Chabala: Roseta Chilufya Chabala:

With the Government’s diversification agenda Zambia trades its products with several neigh-
the manufacturing sector in Zambia, has placed bouring countries. Manufacturers often encounter
strong emphasis on value addition. The sector is problems brought on by the unpredictability of pol-
driven by the agro-processing subsector, which icy making in their export destinations. How can
reflects government’s policy of agriculture as one it be mitigated? Continuous political discussion
of the priority sectors. Value addition causes a rip- needs to take place, engaging regional partners in
ple effect in other sectors. Local industries must joint problem solving. Emphasis should be placed
develop close linkages between local suppliers on honouring the existing trade agreements so
and retailers/developers to continue reaping ben- business operations can continue to enjoy the fa-
efits of economy developing. The current boom in vourable trade tariffs with, the SADC region.
the construction sector, with the Government be- Secondly, Zambia as a land-locked country needs
ing the biggest spender, must benefit the local in- to rely heavily on the fragmented road and rail
dustries to create a trickle-down effect. Production infrastructure as ports are accessible in South
of goods with added value here will employ local Africa, Mozambique, Namibia and Tanzania. It
people contributing to the country’s tax base. drives the transportation costs up and, borders
The Zambian economy is estimated to grow 4-5% are unpredictable. For many commodities, the
in the next five years, so we are seeing a bright price fluctuates on a weekly basis therefore com-
future in manufacturing. The sector’s contribution panies are at risk of their business transactions
to the economy currently stands at 8-10% and being cancelled because of delays. These are the
must be increased. As local manufacturers, we challenges that are endured by all exporters.
would like to encourage the Government to buy
locally as it would encourage foreign manufactur-
ers to set up their industrial base here. In doing so,
there is a real opportunity for technology and skills
transfer to supporting industries adding value to
the whole economy.
 MANUFACTURING INTERVIEW 109

BRIG: ZAMEFA, as one of the major manufactur-

ers in Zambia, must be bullish on Zambia’s future,
so what signs best exemplify your optimism for the
Zambian economy?

Roseta Chilufya Chabala:

First, it starts with policy formulation and planning.
The public sector has developed two guidelines –
Zambia Plus and The National Development Plan
and we have seen continuous commitment from
the Government to deliver the policies accentuat-
ed in the roadmaps. The synergy we are currently
seeing being developed between the private and
public sectors is commendable. The private sector
can only perform well with a strong policy frame-
work and to develop, a close relationship between
the businesses and government, is encouraged.
Secondly, an entrepreneurial culture is growing in
Zambia and one can witness more participation
in the manufacturing sector by Zambians. The
recent years have seen an uptake in the number
of businesses as increasingly more Zambians
start creating employment for themselves. Our
economy cannot develop with only FDI, Zambia
must also cultivate home-grown solutions to our
challenges to develop in the long term. Education
and mentorship play an important role – Zambian
entrepreneurs should learn from the companies
investing in the market to encourage skills and
technology transfer.
110

Phoko yahwa ikhiko yapangiza ikwavo. (Luvale)

A finished knife is used to make others.
An educated or grown up child helps educate those who come
after them.
ENERGY
Tariff increase across all categories following a review

Infrastructure upgrades to uplift Zambia’s power generation capacity

2000 MW of hydro and thermal power is expected to be added in 2018

Increased numbers of independent-power producers

High regional demand for power

112 ENERGY ANALYSIS

A Clean-Energy Country
Powering Growth and Development
BACKGROUND:
“The energy sector has Zambia’s long-term development plan, known as Board (ERB) and the Office for the Promotion of
been identified as one of Vision 2030, describes the vision for the energy Private Power Investors (OPPPI) under the Min-
the core focus areas for in- sector, which is to achieve universal access to istry of Mines, Energy and Water Development
vestment as it will enable Vi- clean, reliable and affordable energy at the low- was established. The OPPPI facilitates the entry
sion 2030 plan of envisaged est total economic, social and environmental cost. of new suppliers into the electricity market, while
economic growth across The country would like to develop an export-ori- the ERB regulates operations and pricing, as well
sectors.” entated energy industry with an increase in the as licensing of such operations.
use of renewable-energy sources. The plan also The Energy Regulation Act, Cap 436 of the Laws
envisages a decrease in the use of wood as an of Zambia (Act No. 16 of 1995), governs the en-
energy source at household level. According to in- ergy sector. The purpose of this Act was to estab-
formation gathered by the Zambia Electricity Sup- lish an Energy Regulation Board and to define its
ply Corporation Limited (ZESCO) in 2009, the de- functions and powers; to provide for the licensing
gree of electrification in Zambia was very low, with of undertakings for the production of energy or the
estimates of 22% of the population having direct production or handling of certain fuels; to repeal
access to grid electricity, 0.03% having direct ac- the National Energy Council Act and the Zambia
cess to isolated electric systems and 77.97% hav- Electricity Supply Act; and to provide for matters
ing no access to electricity at all. The estimated connected with or incidental to the foregoing. The
electrification rate was at 25% by 2013. The en- Electricity Act Cap 433 (Act No. 15 of 1995) of the
ergy sector has been identified as one of the core Laws of Zambia was amended in 2003; this was
focus areas for investment as it will enable Vision aimed at improving the operations of the electricity
2030 plan, of envisaged economic growth across industry. This Act regulates the generation, trans-
sectors. During this period, the Government aims mission, distribution and supply of electricity. In
to increase the country’s power generation capac- 2004, the Rural Electrification Authority (REA) was
ity by upgrading existing and construction of new established through the enactment of the Rural
hydroelectric power stations as well as the use of Electrification Act (No. 20 of 2003). The Authority
other feasible energy sources. was established to hasten the rate of electrification
In the past, ZESCO - the vertically-integrated, and create conditions for the development of rural
state-owned company - dominated the energy areas. Energy development - which includes elec-
sector. In 1995, an Act of Parliament liberalised tricity (building and installation of power stations)
the energy sector to attract private sector par- and fuel (building and installation of processing
ticipation. In light of this, the Energy Regulation and refinery plants for bio-fuel, construction of pe-
 ENERGY ANALYSIS 113

troleum refineries, construction of pipelines and will be finalised in 2018 and will provide the basis
construction of rural filling stations) - has been for future tariff adjustments.
declared a priority sector after amendments to the Due to El Nino and its associated low rainfall pat-
ZDA Act. This is in light of the country’s increasing terns in Zambia that has currently been experi-
need for electricity. The amendments were aimed enced, combined with the country’s reliance on
at reducing the cost of developing power plants hydroelectricity, there has been a power deficit in
and attracting independent power producers. As the country that has resulted in a reduced sup-
such, building power plants - as well as the opera- ply of electricity - mostly to domestic users and
tion thereafter - would qualify for tax concessions not major industries. This over-reliance on a sin-
as stipulated under the ZDA Act. The 2018 Budget gle source of energy presents a risk to economic
Address said that in 2018, the Energy Regulation growth due to the relationship between the supply
Bill and the Electricity Bill will be brought forward of electricity and economic growth. Various stake-
for enactment. The Energy Regulation Bill will al- holders have raised concerns about the current
low for enhanced supervision and regulation of market structure, the regulatory framework of the
the energy sector, while the Electricity Bill will, sector, and the impeding effects these could have
among other things, allow for participation of other on investments into other sources of electricity
players in the industry. production.

ELECTRICITY OVERVIEW: ENERGY PRODUCTION AND DISTRIBUTION,

Energy has been identified as an important driving POTENTIAL SOURCES OF ELECTRICITY AND
force behind economic development in Zambia, THEIR DEVELOPMENT:
and the government has declared its commitment As previously mentioned, ZESCO is the main
to developing and maintaining energy infrastruc- producer and distributor. Another distributor is
ture and services. Zambia has 2,411 megawatts the Copperbelt Energy Corporation (CEC), which
(MW) of installed capacity, most of which is hydro- is a net transmitter of electricity purchased from
electrical. An additional 2,000 MW of hydro and ZESCO at high voltage and distributed to the
thermal power is expected to be brought online mining industry on the Copperbelt. In the North “Most investment
towards the end of 2017 and into 2018. ZESCO Western Province of Zambia, the North Western opportunities in the sector
generates, transmits, distributes and supplies Energy Corporation Limited (NWEC) operates require public-private
electricity throughout Zambia. Its grid distribution the electrical-distribution systems that serves the partnerships.”
is divided into four divisions (North, South, Cop- non-mining load of Lumwana Mine, the town of
perbelt and Lusaka) and 16 regions; it holds the Lumwana and the surrounding areas. Since its
bulk of the transmission system. The Zambian inception, NWEC has commissioned new projects
Government has targeted six distinct areas for to meet the needs of rural electrification within the
mini-grid development (four hydro and two solar). province.
Although there are pockets of private sector ac- The number of independent power producers
tivity in generation, transmission, and distribution, (IPPs) is continually increasing. They contribute to
the vast majority of power in Zambia is operated the national supply by selling electricity to ZESCO
by ZESCO. Due to this, most investment opportu- under Power Purchase Agreements. IPPs gener-
nities in the sector require public-private partner- ate electricity from various sources, including hy-
ships. This does present a challenge to the pricing dropower. It has been calculated that Zambia has a
of tariffs as power has to be sold to ZESCO for on- potential capacity to generate 6,000 MW of hydro-
ward distribution and supply, thus limiting flexibility power, of which only 2,000 MW is currently being
of investors in adjusting domestic consumer tar- harnessed. In terms of solar energy, the National
iffs. A Cost of Service Study was commissioned by Energy Policy estimated that the potential energy
ERB to determine the costs incurred by ZESCO output per unit area was 5.5 kWh/m²/day, with an
in their generation, transmission, distribution and average of 2,000 - 3,000 hours of sunshine per
supply of electricity. The study determined that year. The World Bank, the International Finance
tariffs for all customers were below cost. However, Corporation (IFC) and other donor organizations
upward adjust of tariffs has been met with con- - in conjunction with the IDC - have provided over
testation by some players in the mining industry. $2m for IFC’s Scaling Solar Programme. This
The 2018 Budget Address stated that this study is used to finance the costs of establishing and
114 ENERGY ANALYSIS

implementing transparent, competitive bidding of medicinal, agricultural services and energy. The
processes that will attract qualified solar power country’s media has been asked to help demystify
developers, build institutional capacity and cata- nuclear science as there is the perception that all
lyse market growth. The Ministry of Energy and things nuclear are dangerous. Beyond this, there
Water Development has been assisted by USAID are also companies that supply small-scale gen-
in developing the Renewable Energy Feed-In Tar- erators and solar energy systems. Limitations to
iff (REFIT) with a standardised power purchase generation and supply include inadequate trans-
agreement (PPA). The first phase has been com- port infrastructure, which is being addressed by
pleted; this focused on policy development to be government, and sparsely populated areas that
used in guiding and expanding the private sector’s make grid connectivity impractical.
role in developing the country’s renewable energy
resources and, diversify the supply and nature of ELECTRICITY DEMAND:
energy production. The second phase focuses on The mining sector is the largest consumer of elec-
cost determination to the off-taker for these vari- tricity, which accounts for over 50% of electricity
ous renewable technologies. The establishment consumption. Although other sectors’ electricity
of REFIT has encouraged the inclusion of newer consumption is relatively small, the demand for
and smaller private sector partners specialising in electricity has continually grown, largely by eco-
renewable-energy generation. In addition to this nomic development in the agriculture, manufac-
there are proven coal reserves of high-grade and turing, construction, transport and financial sec-
low-grade thermal coal with further potential for tors. Domestic use has also continued to grow
exploration of coal deposits and coal bed meth- with large potential for continued growth as - in
ane. Currently, there is a thermal power plant with 2010 - 2.1 million households used firewood or
two 150 MW turbines powered by low-grade coal, charcoal as their sources of energy for cooking.
a residue of high-grade coal that had previously However, this opportunity should be viewed in
been a nuisance to the immediate environment. light of the fact that the country is sparsely pop-
Heavy Fuel Oils, a by-product from the Indeni Pe- ulated and a large proportion of the population
troleum Refinery, is also used to generate electric- having low incomes, which suggests appropriate
ity through a thermal power plant. and affordable technologies to serve these needs;
Geothermal energy is an energy source that has mini-grids supplied by mini hydro-electrical plants
remained largely untapped - due to high relative in appropriate areas has been suggested.
costs - with more than 80 hot springs previously Regional market demand is high and can easily
identified, 35 of which were rated high potential absorb Zambia’s increased investments in elec-
in terms of surface water temperature, flow rate, tricity generation, with South Africa and Mozam-
proximity to power lines, ease of access and rela- bique being the largest importers in the past. With
“Regional market demand tive energy potential. There is a 30-year old geo- the implementation of the Zambia-Tanzania-Ken-
is high and can easily ab- thermal power-generation plant with two ya Power Interconnector Project, Zambia will have
sorb Zambia’s increased 120 kW turbines, with recent estimates indicating access to provide electricity to both the Southern
investments in electricity that it could be producing 2 MW of electricity. Bio- African Power Pool and the East African Power
generation.” fuels from agricultural waste are a relatively vast Pool as well as have access to power when an
source of untapped energy when one considers electricity deficit is experienced.
the country’s large reservoirs of water resources,
its favourable climate and over 90% of estimated PETROLEUM AND OTHER FUELS:
arable land being commercially uncultivated. In Zambia imports all of its petroleum requirements,
terms of nuclear power, the country has signed which plays a crucial role in the running of certain
four Memoranda of Understanding (MoU) for a pe- economic sectors, particularly agriculture, trans-
riod of 15 years with Russia’s ROSATOM to help port and mining. In the past, this feedstock was
transform Zambia into a hub of nuclear science procured through an international competitive bid-
for peaceful purposes. These four MoUs entail the ding process, which was transported into Zambia,
training of young nuclear energy engineers, plan- in the form of spiked crude oil through the 1,705
ning for nuclear power plant personnel, develop- km TAZAMA pipeline that is jointly owned by the
ing a nuclear energy regulator and the building of Governments of Zambia (67%) and Tanzania
a nuclear plant; these are aimed at the provision (33%). This was refined at the government-owned
 ENERGY ANALYSIS 115

Indeni Refinery in Ndola, in the Copperbelt Prov- an increase in electricity production from sources
ince. The refinery consists of a large reforming like bagasse and ethanol, which are both by-prod-
unit (214,000 MTS per year), a hydro-treater for ucts from sugar production. Jatropha, as the main
desulphurization of kerosene and lighter fractions, feedstock for biodiesel production, has been pro-
and a Vacuum Distillation Unit (VDU) for specific moted and there is about 6,000 ha of land under
technical conditions. This facilitates spike crude Jatropha production, but commercialisation of this
processing with the aim of minimizing heavy fuel is still in its infancy.
production. The current capacity of the refinery
is 850,000 metric tons per year. From the Ndola
Fuel Terminal, Oil Marketing Companies (OMCs)
uplifted the refined products and distributed these
for sale to fuel stations and commercial custom- INVESTMENT INCENTIVES:
ers. Refined products were transferred from the Since the Government has declared energy de-
refinery, via pipelines, into storage facilities at the velopment as a priority sector, amendments to the
Ndola Fuel Terminal. From here, it was loaded and ZDA Act allow power plants to be built, expanded
transported - by rail or truck - and delivered to the or modernised and qualify for tax concessions un-
OMCs, of which there are 21 registered OMCs. der certain conditions. Through amendments to
However, the 2017 Budget Address indicated that this Act, there are fiscal and non-fiscal incentives
the Government would disengage from direct fuel to investors who invest not less than $500,000 in
procurement by March 2017. This was intended the building and installation of power stations. In
to remove the burden of oil procurement from the terms of fiscal incentives, there is a zero percent “Amendments to the ZDA
National Treasury, create efficiencies and pro- tax rate on dividends for the five years from the Act allow power plants to
mote participation by the private sector. The 2018 year of first declaration of dividends, zero percent be built, expanded or mod-
Budget Address stated that this measure would tax on profits for five years from the first year of ernised and qualify for tax
take effect in the first quarter of 2018. operation and zero percent import duty on capital concessions under certain
In the past, two major exploration programmes goods and machinery (including specialized mo- conditions.”
have been undertaken, but were terminated be- tor vehicles) for five years. Regarding non-fiscal
fore the intersection of favourable reservoir hori- incentives, there are investment guarantees and
zons. Recent explorations that covered parts of protection against state nationalization and free
the North-Western, Western and Eastern Prov- facilitation for application of immigration permits,
inces of Zambia, which used the Microbial Pros- secondary licenses, land acquisition and utilities.
pecting for Oil and Gas technique, have indicated In addition, other incentives are available for in-
that the Okavango and North Luangwa basins vestments that fall outside of the Act’s determina-
have potential for oil and gas. The Government tion of priority sectors.
has tendered these oil blocks for private sector
prospecting. There is a legal requirement for all
OMCs to have an equivalent of 15 days working
petroleum stocks on hand. Due to their deficit in
storage abilities, most have not been able to meet
this requirement. To address this situation, the
Government is looking towards the engagement
of a strategic partner to construct a 50 million litre
petroleum terminal in Lusaka on a Build, Operate
and Transfer (BOT) basis.
Regarding biofuel, there are five main compa-
nies engaged in production. The capacity exists INVESTMENT POTENTIAL:
and the sub-sector has been inclined towards a The potential for investment is vast when one
two-pronged approach, which are feedstock pro- considers the different sorts of needs of different
duction and promotion, and biofuel production. proportions of the population, sectors and specif-
Currently, limited quantities of bio-ethanol are be- ics of these. Investment in large-scale electricity
ing produced from molasses, but are insufficient generating plants is definitely a need for both local
quantities for blending with petrol. There has been and regional consumption
116 ENERGY INTERVIEW

Electrified Future
David Mabumba,
Minister of Energy

BRIG: What is your ambition for the Energy sector

in Zambia?

David Mabumba:
Although Zambia has experienced a significant the selection of Neoen First Solar and Enel Green
deficit of power between 2014 and 2016, my Power Limited. The current generation capacity
key ambition for Zambia is to become a net ex- of 1,800 MW fully supports the current demand,
porter of power. How to achieve that vision? We, 1,900 MwWpeak, however, to become an energy
the Government need to fast-track investment exporter, Zambia needs to develop deeper syner-
programmes targeting our power generation ca- gies with the neighbouring countries and invest in
pacities. In my opinion, Zambia can become an interconnectors with Malawi, Mozambique, Zim-
energy exporter by the year 2025. We currently babwe, South Africa, and the East African Power
have several key hydro power generation projects Pool in Tanzania and Kenya to prepare for energy
that are ripe for investment or are under construc- exports. Zambia cannot exist as an island. Being
tion – Kafue Gorge Lower hydro power project, part of the SADC is one of our key competitive ad-
which will add 750 MW to the national power grid, vantages and the investment in Zambia’s energy
Batoka Gorge hydro power project with a future sector means a potential investment in eight other
capacity of adding 2,400 MW shared between countries. More over, power plays a significant
Zambia and Zimbabwe, as well as four potential role in the industrialisation processes for Zambia
sites in northern Zambia with a potential capac- to unlock the overall growth potential of our coun-
ity of 1,100 MW. There are immense investment try. Job creation, rural development and manufac-
opportunities in Zambia’s energy sector and we turing all stem from a sufficiently developed power
have seen many foreign partners expressing in- sector therefore investment in Zambia’s energy
terest in investing in power generation. We have sector is crucial.
developed numerous successful partnerships with
foreign entities: LUNZUA Power Authority has en- BRIG: What can Zambia to do in still investor
gaged Global Lake of the Commonwealth Devel- confidence?
opment Corporation (CDC) asan equity partner to
develop a 247 MW hydro-power project across David Mabumba:
Kalungwishi River with a estimated $690m. Al- Every investor is looking for political stability as a
though Zambia’s electricity mix is dominated by key performance indicator to guarantee the safety
hydro generation and large and mini-hydro sta- of their investment. Zambia leads as a beacon of
tions account for 95% of installed capacity, we peace, offering our foreign and local partners a
would like to diversify the power generation into peaceful political environment and fertile business
other renewables. Zambia has recently signed climate with our micro economic credentials also
agreements that pave the way for a second round stabilising. Of course, challenges exist and per-
of investments to develop privately-financed solar sist. The structural challenges and licensing pro-
power plants in the country under the World Bank cedures can make a potential investor fatigued.
backed Scaling Solar programme with CPCS It is important to create a one-stop-shop for our
Transcom International of Canada and SMEC In- investors to reduce the waiting times and the
ternational of Australia. Also, construction of the number of institutions and licenses to improve the
100 MW solar farms located at the Lusaka South overall quality of doing business in Zambia.
Multi-Facility Economic Zone has begun following
 ENERGY INTERVIEW 117

Planning Ahead
Victor Mulenga Mundende,
Managing Director, Zesco

BRIG: How is Zambia working to achieve

self-sufficiency for its electricity needs?

Victor Mulenga Mundende:

Electricity is the lifeblood of any nation’s economy power plants around the country which in-
and the Electricity Supply Industry (ESI) must keep clude the Lusiwasi Upper in Serenje from 12
pace with the nation’s economy. As the population to 15 MW in addition to another 84 MW site
and the national economy grows, it demands the downstream, Chishimba Falls Power Station
construction of new power stations and the reha- from from 6 to 10 MW
bilitation of existing generating machines at vari- • We are also in the process of constructing
ous power stations to increase power generation mini- hydro power plants in highrainfall areas
capacity as well as availability of plant machinery. to cater for local demand, spread across the
This anticipated increase in generation capacity entire country. Through this distributed gen-
also requires the extension, as well as upgrading eration; we shall be spreading the hydrologi-
of capacities of various transmission and distribu- cal risk to other parts of Zambia where there
tion lines across the country to ensure that the are more favorable rainfall patterns,
power generated can be efficiently distributedto • Notably, in transmission, ZESCO recently
various load centres across the country, where it completed the upgrading of transmission
is needed. In this regard, we have since achieved systems supplying the Northern and Eastern
major milestones towards these goals, notably: parts of the country which is expected to avail
• We recently commissioned the new 120 MW economic opportunities in these parts of the
Itezhi-tezhi Hydro Power plant, which was a country. The supply capacity was improved
public private partnership, from 66 kV to 330 kV representing roughly
• We are off-takers for a recently commissioned a 500% improvement. We have also com-
300 MW thermal coal power plant driven by pleted a major milestone by commissioning
an Independent power producer transmission lines and sub-stations in the
• We are facilitating, as off-takers, for major North Western part of Zambia. The electricity
solar plants being driven under the umbrella supply capacity in the North and the Western
of the Industrial Development Corporation Province has increased tremendously and is
(IDC), who are our shareholders, a major departure from the days of the diesel-
• We are in the process of constructing the Kaf- generation plants, which had severe capacity,
ue Gorge Lower (KGL) 750 MW Hydro Power environmental and economic constraints.
Station, which is due for completion in 2020.
Once completed KGL will be the third larg- BRIG: In what ways can Zambia encourage fur-
est power station in the country after Kariba ther investments in the energy sector?
North Bank and Kafue Gorge Upper Hydro
power Stations respectively. Victor Mulenga Mundende:
• In December 2017, the Musonda Falls Hydro The implementation of Cost Reflective Tariffs is
Power Station located in Luapula Province, key, not only for ZESCO, but for the growth of the
which is being upgraded from from 5 to 10 Electricity Supply Industry. For us to create appe-
MW. Apart from that, ZESCO has embarked tite for further investment in this sector, we need
on projects for the upgrading of many other a tariff that allows all industry players to recover
118 ENERGY INTERVIEW

the cost of doing business whilst making an at- energy has a bright future and will be money well
tractive return on the investment. For a long time spent for many years to come. ZESCO has since
in Zambia, whilst the dynamics of the economy partnered with the Industrial Development Cor-
kept changing, the electricity tariffs remained poration (IDC) for the development of 200 MW
flat. This factor alone became a hindrance to the of electricity from solar, by mid-2018, with other
growth of the electricity industry as there was in- developments on the horizon. Furthermore, we
sufficient revenue to cover the ever-increasing are in the process of implementing Renewable
developmental needs and cost of doing business. Energy Feed–in Tariff (RE-FIT) to promote power
We are now happy to note that, with the support trading between on grid power and other renew-
of Government and the Energy Regulator, this is able energy sources.
gradually changing. ZESCO recently applied to
the ERB to increase the tariff and was awarded a BRIG: What role is ZESCO playing in the energy
75% upward increase of electricity tariffs in order sector and how is ZESCO working with potential
to bring the prevailing tariffs closer to cost-reflec- investors?
tive levels. The 75% tariff increment is, however,
just one initial step towards the migration to full- Victor Mulenga Mundende:
cost reflectivity. In 1997, Government liberalised the energy sec-
tor to encourage private sector participation in the
BRIG: What is your outlook for the evolution for electricity sub-sector. ZESCO is a major player in
the power mix in the coming years? the power supply and energy trading in Zambia
and surrounding countries. In this regard, ZESCO
Victor Mulenga Mundende: has embarked on ambitious programmes to posi-
You may wish to know that our current electric- tion itself as a major power trading utility in the sub
ity generation portfolio is made up of over 99% -region and beyond through the following:
renewable hydro-power, which has many advan- • We are enhancing Public-Private Partnership
tages, but also specific vulnerabilities to climatic (PPPs) with other power producing compa-
variables. In the recent past, we experienced a nies in Zambia. For example, ZESCO has
severe drought that seriously impacted our ability partnered with Maamba Collieries to get 300
to satisfy national electricity demand, notably from MW of electricity that is generated from coal.
early 2015 up to the end of 2016. We are there- • Upgrading transmission lines across the
fore in a hurry to mitigate the over-dependency on country to ensure stable supply for the local
hydro-electricity by enriching the national electric- market and creating inter-face points with
ity generation mix to embrace other energy sourc- other Utilities from neighbouring countries.
es such as solar, wind, geo-thermal, thermal, and The idea is to effectively utilize our position as
Nuclear Energy to have alternative and improved a land-linked country with eight neighbours.
supply. At the same time, we shall continue ex- • Providing the platform as an off-taker of
panding our hydro-generation capacity to ensure choice to potential investors in power genera-
that we have sufficient slack to accommodate the tion.
occasional bump caused by climatic or indeed • Ensuring provision of spinning reserves in
other risks. In the wake of technological advance- power generation to accommodate inter-fac-
ments that have lowered the cost of renewables, ing with renewable energy power plants.
a healthy energy mix is the way to go to mitigate • Upgrading the entire power system and espe-
against risks such as climatic change. Zambia has cially, the distribution system to position the
abundant un-tapped renewable energy sources electricity grid to provide quality service and
and the outlook is that investment in renewable stable supply.
 ENERGY ARTICLE 119

Energy Management Opportunities

Using Energy Efficiency and Time-of-Use
Tariffs Effectively.

Energy Efficiency:
In order to incentivise industrial and agricultural lowering system costs for the utility and reducing
electricity consumers to reduce peak demand, customer bills by lowering prices during off-peak
ZESCO Demand Side Management carries out period hours. The TOU time periods are as fol-
free energy audits to establish consumers’ Energy lows:
Management Opportunities (EMOs). Once imple-
mented, these EMOs result in reduced electric- 06:00 hours to 18:00 hours - Standard Time
ity bills and increased profitability. These efforts 18:00 hours to 22:00 hours - Peak Time
however, have not been able to offset the rising 22:00 hours to 06:00 hours - Off-Peak Time
energy demand as some consumers are not im-
plementing the recommended EMOs.
For ZESCO, the under-use of EMOs, which would With the applied TOU tarrif, when industrial and
help stabilise the electricity network and reduce agricultural customers shift their production hours
undesired demand emanating from non-effective from standard to off-peak periods, they will enjoy
use of electricity, forces the utility to embark on lowers prices of up to a 50% reduction in demand
load shedding, which has a severe impact on pro- charges and a 25% reduction in energy charges.
duction levels in all sectors of the economy. Shifting from peaks periods to off-period gives
On 1st May and 1st September, 2017 ZESCO even greater savings. The intervention gives in-
effected a tariff increase of 50% and 25% re- dustrial and agricultural customers incentives dur-
spectively across all tariff categories following a ing the off-peak period.
successful tariff review application to the Energy
Regulation Board.

Time of Use:
Through the Time-of-Use (TOU) tariff, the revised The advantages of the TOU tariff are:
tariff regime incentivises customers in the indus-
trial and agricultural Maximum Demand (MD) • Efficient utilisation of the generation resourc-
category to lower peak loads in order for them es as it flattens the load curve.
to reduce their electricity costs. ZESCO’s objec- • Reduced load shedding when large consum-
tive is to flatten peak loads and shift loads from ers shift their production activities to the off-
peak to off-peak periods. To that effect, ZESCO, peak period
after a successful application to the regulator, was • Reduced bills through incentives to the cus-
granted authority to apply the TOU tariff across tomers who shift their activities to the off-peak
all industrial and agriculture customers in the MD period.
category. Time-of-Use is one of the dynamic tar-
iffs designed with prices that vary by time periods
120

Khunyi janjamba jakulichavila. (Luvale)

Firewood for cooking the elephant is gathered by itself.
A self-imposed problem. The elephant has knocked down the
tree that produces the firewood to cook it.
TRANSPORT
PPP regulatory framework introduced ahead of infrastructure upgrade

Aviation sub-sector poised for growth with more players on board

Major airport upgrades across Zambia

122 TRANSPORT ANALYSIS

Logistically Speaking:
We ARE Moving Forward!
“Zambia is a landlocked There are four commercial transport systems in storage, laboratory facilities and testing equip-
country surrounded by Zambia. These are the railway network, the avia- ment as well as ICT infrastructure at points of
the Democratic Republic tion system, the road network and, to a lesser ex- entry. This would be achieved through: (a) Inter-
of Congo, Angola, Malawi, tent, maritime and inland waterways. This should country trade centre promotion, establishment
Zimbabwe, Mozambique, be viewed in the context that Zambia is a land- and enhancement; and (b) Inland dry ports devel-
Tanzania, Namibia and Bot- locked country surrounded by the borders of the opment. According to Development Outcome 6:
swana” Democratic Republic of Congo (1,930 km), An- Improved Transport Systems and Infrastructure, a
gola (1,110 km), Malawi (837 km), Zimbabwe (797 well-functioning transport system has the poten-
km), Mozambique (419 km), Tanzania (338 km), tial to reduce the overall cost of doing business in
Namibia (233 km) and Botswana (less than 1 km). the country, which would contribute towards the
The rail, road and waterway systems connect the realisation of a diversified and resilient economy
country to its neighbours to varying extents, while for sustained growth and socio-economic trans-
the aviation system connects the country directly formation. In addition, improved transport systems
to the rest of the world. and infrastructure would enable efficiencies in the
These four systems will be described individually movement of goods and people within Zambia.
according to the present situation, the envisaged Furthermore, as a land-locked country, with eight
future of the sub-sector (as guided by the Seventh neighbouring countries, Zambia requires its trans-
National Development Plan 2017 - 2021 {7NDP} port infrastructure to be in a good state in order
and Vision 2030) and, the sub-sector’s invest- to link with principal ports and serve as a hub for
ment potential and oppourtunities. This should all goods in transit. Thus, the Government remains
be viewed within the context of the 2018 Budget determined to deliver improved transport infra-
Address, 7NDP and Vision 2030. From the 7NDP, structure within the four modes of transportation to
Development Outcome 6: Improved Transport grow the economy and improve socio-economic
“the Government remains Systems and Infrastructure, in conjuction with opportunities across the country. The Government
determined to deliver im- Development Outcome 5: Improved Access to views the investment in improved transport sys-
proved transport infrastruc- Domestic, Regional and International Markets’ tems and infrastructure as a driver of wider eco-
ture to grow the economy.” Strategy 4: Improve Logistics Management are nomic benefits, including supporting growth and
pertinent in this context. According to Develop- creation of jobs, raising the productive capacity
ment Outcome 5: Improved Access to Domestic, of the economy, driving efficiency, boosting inter-
Regional and International Markets’ Strategy 4: national competitiveness and developing Zambia
Improve Logistics Management, the Government, into a land-linked country. The strategies defined
in partnership with the private sector, will facilitate within this document will be described in the vision
the provision and improvement of logistical infra- for the different transport modes.
structure and services to support both domestic There is a large financing gap for infrastructure
and international trade, such as warehousing, and the Government is aware that public-sector
 TRANSPORT ANALYSIS 123

resources and development partners’ funds are of railway network rehabilitation and modernisa-
limited, and can only cover part of the needed tion; greenfield rail spurs construction; and sector
financing. The Government has recognized the reform implementation. Certain strategic railway
need to mobilize private sector financing to sup- routes have been identified, these are:
port public-infrastructure development through • Chingola to Jimbe (Border with Angola): This
PPPs. Government intends to facilitate PPP pro- involves linking the existing line in Chingola
jects and has introduced a regulatory framework through Solwezi to the border town of Jimbe
that is comprised of the PPP Policy and Act No. to enhance transportation of freight and pas-
14 of 2009. senger traffic to Lobito Bay Port in Angola;
• Kafue to Zawi in Zimbabwe: This will link
RAILWAY SYSTEM’S PRESENT SITUATION: Zambia Railway lines to Ziwa, in Zimbabwe,
Zambia’s rail network enables peoples and freight as the shortest route to the Port of Beira in
to travel within Zambia and between countries. Mozambique;
Zambia Railways operates the rail network. The • TAZARA Nseluka to Mpulungu Port: This
railways generally operate below their original involves linking the Mpulungu Port to the
design capacity, but struggle to increase volumes TAZARA line at Nseluka to facilitate imports
due to poor track condition, unavailability of loco- and exports from the Great Lakes region to
motives and wagons, and low operating capital. the sea ports on the Indian Ocean;
Zambia is connected to the port in Dar es Salaam • Extension of the Mchinji/Chipata Railway line
via the TAZARA lines, which are jointly owned by to TAZARA: This involves linking the Chipata-
the governments of Zambia and Tanzania. The Mchinji line through the Petauke District to
Chipata-Mchinji railway link has recently been the Port of Nacala in Mozambique; and
opened, which connects into the Malawi railway • Railway link between Zambia and Namibia
network and further connects Zambia to the north- (Livingstone to Sesheke): This involves the
ern Mozambique railway network. partial rehabilitation of the Mulobezi line and
feasibility studies for construction of a spur
RAILWAY SYSTEM’S ENVISAGED FUTURE between Livingstone and Katima Mulilo via
DEVELOPMENTS: Kazungula that connects to the Namibian
Zambia aims to improve and expand the rail net- Railway System as part of the Walvis Bay-
work to reduce the burden placed on road infra- Livingstone-Lusaka-Ndola-Lubumbashi Cor-
structure. Developing rail routes that link important ridor.
exit points is vital for facilitating smooth access to
the outside world, enhancing trade in the region RAILWAY SYSTEM’S INVESTMENT POTEN-
and making Zambia a competitive country for do- TIAL AND OPPORTUNITIES:
ing business. During the 7NDP’s period, and into The Government aims to promote private invest-
Vision 2030’s, the Government has prioritised the ments in the rehabilitation and modernization of
construction of new railway spurs and rehabilita- railway networks, greenfield rail spurs construc-
tion of existing lines. The focus is to undertake tion, including intra-city transit systems. Assis-
a comprehensive rehabilitation of Zambia Rail- tance will be required in the migration from the
ways, mainline (including inter-mine lines) and to existing Cape gauge to Standard gauge, develop-
revitalise the Tanzania-Zambia Railway Authority ment of attendant infrastructure, acquisition of roll-
(TAZARA) to increase operational efficiencies, re- ing stock and other equipment and improving the
duce the cost of freight and increase the tonnage management of the rail systems.
carried. During the 7NDP period, the Govern-
ment will commence construction of the Chipata- AVIATION SYSTEM’S PRESENT SITUATION:
Petauke-Serenje railway line, which will complete There are currently four international airports, six
the link from the port of Nacala to existing railway secondary airfields and five airstrips that serve
lines in Zambia. The Government plans to migrate international and domestic flights. The Kenneth
the rail gauge from the existing Cape gauge to Kaunda International Airport is Zambia’s main air-
Standard gauge, which will enable higher speeds port. The three smaller airports at Ndola, Living-
and higher tonnage of freight. Furthermore, focus stone and Mfuwe, as well as secondary airfields
will be on the development of attendant infrastruc- at Chipata, Kitwe, Kasama, Mongu, Solwezi,
ture, acquisition of rolling stock and other equip- and Mansa compliment this. The construction
ment as well as improving the management of of the Copperbelt International Airport has been
the rail systems. This will be through programmes launched and will be spread over three years.
124 TRANSPORT ANALYSIS

This new airport will be comprised of a one mil- civil aviation, all of which require specific exper-
lion capacity terminal building, a hotel, business tise. Beyond the Copperbelt International Airport,
complex, cargo terminal and fuel farm, among the airfields at Chipata, Kitwe, Kasama, Mongu,
other airport facilities. There is no national airline, Solwezi and Mansa have been identified for re-
but there are a number of airlines that serve and development. Zambia needs international and
connect Zambia to international routes via Johan- reputable brands at its airports, which would give
nesburg, Durban, Cape Town, Addis Ababa, Nai- confidence to travellers. The ban by the Europe-
robi and Dubai. Proflight Zambia is a privately-run an Union on Zambian registered airlines into the
airline with flights to numerous local destinations, EU airspace was lifted in 2016 and is expected
regional flights to Durban and proposed routes to to provide immediate economic benefits to Zam-
the DRC and Johannesburg. Another local carrier bia. Dr. Jim Belemu, the CEO of Mahogany Air,
,Mahogany Air, resumed its operations in 2017 told BRIG: “The lifting of the ban was a welcomed
after a three-year long hiatus and currently oper- step towards further development of the Zambian
ates a flight between Lusaka and Ndola with ad- aviation sector and will allow us, as a local carrier,
ditional routes expected to serve Solwezi, Mfuwe, to grow our horizons and, hopefully, open oppor-
and Livingstone. The Government has an “open tunities for partnerships with airlines operating in
sky policy” and is currently promoting the estab- wider international markets”.
lishment of Zambia as an air cargo hub for the
Southern African region. Additionally, the Zambia
Airports Corporation is one of the Government’s
parastatals that is profitable. ROAD SYSTEM’S PRESENT SITUATION:
Zambia has a classified road network of under
AVIATION SYSTEM’S ENVISAGED FUTURE 70,000 km of public roads, which cover the coun-
DEVELOPMENTS: try relatively well. The country relies heavily on
In terms of developing aviation infrastructure and its road network to ship mine inputs and outputs
“The ban by the European operations, the 7NDP’s focus will be on the con- through its eight neighbouring countries. Zambia’s
Union on Zambian regis- struction and upgrading of airport infrastructure to neighbours also rely heavily on Zambian roads
tered airlines into the EU provide modern equipment and facilities that will to provide a reliable and shorter path to African
airspace was lifted in 2016.” enable the country to handle higher volumes of ports. The Road Development Agency (RDA) has
traffic, both passengers and cargo. With this in the responsibility of upgrading, maintaining and
mind, provincial and strategic airports will be up- constructing public roads in the country. From
graded to increase the capacity to handle more the classified road network, the RDA has identi-
traffic. A national airline is viewed as critical in fied 40,454 km as the Core Road Network (CRN).
strengthening the diversification of the economy; This has been recognised as the minimum net-
for example, the exportation of agricultural pro- work required to enhance economic development
duce. Programmes to facilitate these develop- and thus needs to be maintained in an acceptable
ments include the upgrading of provincial and condition. There are various ongoing projects,
strategic airports, upgrading and construction of namely:
new international airports, civil aviation capacity • Link Zambia 8000, aimed at Land-Linking
development and the establishment of a national Zambia with her neighbours, was initiated in
airline. 2012, and will restore over 8,000 km of roads
across the country over a period of five to
AVIATION SYSTEM’S INVESTMENT POTEN- eight years. This is to link Zambia to South
TIAL AND OPPORTUNITIES: Africa, Zimbabwe, Mozambique, Malawi,
In achieving the goals of the 7NDP and Vision Tanzania, the Democratic Republic of the
2030, the acquisition of aircraft that can serve Congo and Namibia.
domestic, regional and inter-continental routes • Pave Zambia 2000 (also initiated in 2012 and
will be necessary as well as cargo planes that aims to pave 2,000 km of urban roads across
will assist in exporting goods such as agricultural the country),
produce. The construction, development and up- • Feeder Road Rehabilitation (a continuous
grading of provincial, strategic and international programme for maintaining feeder roads in
airports, and auxiliary facilities, is a need that order to stimulate market access for agricul-
has to be met as is the capacity development of tural produce);
 TRANSPORT ANALYSIS 125

• C400 (an initiative to improve 400 km of the

road network in the Copperbelt Province,
and the L400 that is geared towards improv- MARITIME AND INLAND WATERWAYS’ ENVIS-
ing 400 km of roads in and around Lusaka). AGED FUTURE DEVELOPMENTS:
Road infrastructure will be funded through the In terms of enhancing transportation, the con-
user-pays principle in order to finance these struction and rehabilitation of maritime and inland
programmes. waterways has been identified for development.
The focus will be on expansion and modernisation
of the inland port of Mpulungu to increase access
ROAD SYSTEM’S ENVISAGED FUTURE DE- to the markets of the Great Lakes Region. There
VELOPMENTS: will also be a focus on the development and reha-
Construction and rehabilitation of the road net- bilitation of canals and harbours to service rural
work is the third strategy of the 7NDP’s Develop- communities through increased trade and service
ment Outcome 6. The focus here is the construc- delivery. During the 7NDP’s period, studies will be
tion and maintenance of road infrastructure. This undertaken to determine the feasibility of devel-
is to ensure the enhanced and safe connectivity oping the Kafue River into a navigable channel
across the country and to preserve investments in for transporting bulk goods as well as for tourism.
road assets. Furthermore, this work will help fos- Programmes include canal construction and reha-
ter trade and development by facilitating greater bilitation, and harbour infrastructure rehabilitation
efficiencies in the movement of goods and ser- and modernisation.
vices, as well as reducing travel times and costs.
Presently, and during the 7NDP’s period, the Gov-
ernment will continue to implement its key pro-
grammes in this sub-sector as described above.

ROAD SYSTEM’S INVESTMENT POTENTIAL

AND OPPORTUNITIES:
The Government plans to continue developing
tolls and collecting road-user charges to finance
these programmes as well as pursuing PPPs for
financing road construction. As is the nature of MARITIME AND INLAND WATERWAYS’ IN-
such projects, the establishment of quarries and VESTMENT POTENTIAL AND OPPORTUNI-
acquiring associated equipment is essential, as TIES:
well as acquisition of road construction machinery In this sub-sector, opportunities lie in feasibility
and associated inputs. In terms of Pave Zambia studies and the development and rehabilitation of
2000, the installation and maintenance of brick canals and harbours. In a water-rich country, it is
paver plants, the production of pavers, and road logical to use these resources to gain a competi-
construction is a need that must be met. tive advantages.

MARITIME AND INLAND WATERWAYS’ PRE- IN CONCLUSION:

SENT SITUATION: This sector, and its four sub-sectors offer, a variety
Zambia’s only harbour is the Port of Mpulungu, of investment and business opportunities. These
which is situated in the north-east of Zambia and vary from feasibility studies, supplying different
at the southern tip of Lake Tanganyika. The lake is types of equipment, manufacturing of inputs need-
shared by four countries, namely Burundi, Demo- ed for developing infrastructure and construction,
cratic Republic of the Congo, Tanzania and Zam- amongst others. The Government has recognised
bia. There are a variety of lakes and waterways the importance of logistical infrastructure and has
both within the country and along it borders that created a conducive environment for business de-
are used, through various modes, for transporta- velopment and investments.
tion.
126 TRANSPORT INTERVIEW

Revamping Transport Infrastructure

Brian Mushimba, Minister of Transport and Communication

BRIG: How is the Government’s diversification

agenda supporting growth in the transport
sector?

Brian Mushimba:
Zambia is transforming itself from a mono-pro- Revamping the country’s railway lines are an-
duct market to a more diversified economic mod- other key priority for the Government. TAZARA,
el. Historically, because of the global copper price co-owned with the Tanzanian Government has
fluctuations and Zambia’s reliance on its mining recently signed an agreement with Bombardier
sector the country has faced many challenges that Transportation, a global leader in rail and aircraft
have had a negative impact on the performance of technology for the revitalization of the 1,860 km
the economy. railway that links Zambia to the seaport of Dar es
The current administration has prioritized devel- Salaam in Tanzania. It will be the shortest route
oping various sectors, including cross-cutting for many regional logistics companies and is ex-
infrastructure development includes roads, rail, pected to boost freight transportation capacity.
ports, energy, and industrial zones. Zambia’s aviation sector is also experiencing a
The enhancement of the domestic transport in- major enhancement through the upgrade of air-
frastructure plays a crucial role in the country’s port infrastructure at Kenneth Kaunda Internation-
development. Link 8000 is an ambitious project al Airport in Lusaka, Harry Mwaanga Nkumbula
to improve Zambian road network and construct International Airport in Livingstone, and building
more than 8000 km of roads across the country. a brand new greenfield airport in the Copperbelt
It is important to build infrastructure to efficiently Province.
open new transport corridors linking various prov- transport infrastructure development is vital to the
inces to the economic hot spots – Lusaka and the tourism and manufacturing sectors which current-
Copperbelt thus efficiently distributing goods and ly boast many greenfield investment opportunities
commodities creating economies of scale. in Zambia.
 TRANSPORT ANALYSIS 127

BRIG: To what extent is mobile infrastructure and

technology expected to grow in the coming years
in Zambia?

Brian Mushimba:
Zambia has attracted several investments in $280m in the installation of 1,009 towers over the
building the country’s data infrastructure. MTN next three years and is expected to reach 92%
has invested $55m in 2016 in a fibre network from coverage. MTN, Airtel and Zamtel are Zambia’s
Lusaka to Nakonde, a town on the Tanzania bor- three operators providing mobile internet services
der, Kalumbila in the North-Western Province and to the 12 million mobile phone subscribers. The
Ndola on the Copperbelt. Also, Airtel has allocated Government of Zambia is currently consider-
$50m to enhance its network system. The state- ing bringing in a fourth operator in a bid to lower
owned Zamtel will similarly roll out the phase two the cost of voice and data services and stimulate
of the communication towers project, investing competition on the market.
128 TRANSPORT ARTICLE

Upgraded Infastructure
New Airlines, More Destinations, Greater Frequency
The organisation responsible for supervising and The RwandAir direct service to Lusaka came
maintaining Zambia’s air services and navigation- about because of the growing demand created
al safety has been enjoying notable success in its by foreign investment and trade opportunities be-
bid to position Zambia as a regional hub. tween the two countries.

Zambia Airports Corporation Limited (ZACL) has CAPACITY:

been working hard to expand and improve its fa- Due to the expansion of business opportunities re-
cilities and services to deal with the continuing gionally and internationally, Kenya Airways, South
growth in passenger and cargo throughput at the African Airways and Ethiopian Airlines continue to
Nation’s four main airports. Its efforts have borne step up their frequencies while providing flights
fruit as new airlines have been persuaded to oper- into more than one airport in the country.
ate services to and from Zambia, while existing
carriers have stepped up their frequencies and One of the most recent developments came in
added new destinations. July 2016, when Kenya Airways introduced flights
between Nairobi, Livingstone and Cape Town.
In recent years, ZACL has seen a continued
growth in the number of passengers and flights at Zambia’s largest domestic operator, Proflight
the Nation’s four main airports – Kenneth Kaun- Zambia, also continues to grow, it has introduced
da (Lusaka), Harry Mwaanga Nkumbula (Living- new destinations such as its Lusaka to Durban
stone), Simon Mwansa Kapwepwe (Ndola) and service, launched in September 2015. Martin Air
Mfuwe. began weekly cargo flights into Lusaka in Janu-
ary 2015 with a routeing from Amsterdam, Johan-
The outbreak of the Ebola virus in March 2014 nesburg, Lusaka, Nairobi and back to Amsterdam.
led to a stunted growth figure of just 0.8% in pas- This has boosted the already growing cargo activ-
senger numbers between 2014 and 2015 even ity in Lusaka.
though the outbreak was thousands of miles away
in West Africa. Some airlines have also increased capacity on
their routes, with Ethiopian Airlines introducing an
The key drivers of passenger growth have been Airbus 350 on services between Addis Ababa and
an increase in the number of airlines operating in Lusaka.
Zambia – providing more capacity and connectiv-
ity – along with increased frequencies from ex- The outlook is bright for future passenger busi-
isting airlines and a general rise in activities that ness. Projects include the ongoing rehabilitation
stimulate air travel, notably business and tourism. and construction of a new terminal at Kenneth
Kaunda International and a new greenfield air-
Zambia has seen new foreign carriers offering port serving the Copperbelt region. Additionally, a
flights to and from Zambia; and there has been a new terminal building in Livingstone was commis-
marginal growth – despite the setbacks of Ebola sioned in December 2016.
in West Africa – thanks to the increase in flight fre-
quency, the demand from business travellers and
the growth in the conference hosting sector. If all things remain equal, passenger figures are
expected to continue growing. A contributing
Among the new airlines thatcommenced opera- factor to this growth was the hosting of the Afri-
tions in 2015 was RwandAir, which began oper- can Development Bank (AfDB) and Inter-
ating flights between Lusaka and Johannesburg. Parliamentary Union conference in early 2016.
 TRANSPORT INTERVIEW 129

Potential is Sky-High
Engr. Robinson Misitala, Managing Director, Zambia Airport Corporation Limited

BRIG: The Southern African region has recently

seen upgrades of several of its international air-
ports with the host countries competing for the
status of a regional hub. How is Zambia posi-
tioned to succeed?

Mr Robinson Misitala:
Effective air transport is of paramount significance function as an aviation hub and an import and ex-
for an emerging market like Zambia. The aviation port gateway for the mining, manufacturing, and
sector is a good indicator of the economic growth agricultural sectors. The new airport is conveni-
of a country and is one of the key pillars of the ently situated near the Chambishi Multi-Facility
economy. The intertwined nature of the economy Economic Zone and will house a complex with car
positions air transport as a crucial component of parks, a hotel, commercial and residential facili-
growth for numerous other sectors and Zambia ties including offices, and a shopping complex.
Airports Corporation (ZACL) is well positioned ZACL being Zambia’s main provider of ground
to develop air transport in Zambia with substan- -handling services for scheduled airlines has re-
tial growth in both passenger and freight traffic cently invested in improving its ground-handling
achieved in the recent years. The Corporation has facilities leading to greater efficiency and higher-
embarked on an ambitious infrastructure upgrade quality services at all main airports.
plan for our four international airports with an in-
vestment of over $1bn and will attract six million BRIG: What are the greatest obstacles to increas-
passengers annually by 2019. ing foreign investment in the transport sector and
Our flagship airport Kenneth Kaunda International how can they be overcome?
Airport, is currently undergoing major revamping
of its infrastructure, with the construction of Termi- Mr Robinson Misitala:
nal 2 well under way. It will allow KKIA to serve 4 The development of the aviation sector in Africa
million passengers annually, twice the current ca- is crucial to lowering the costs of doing busi-
pacity. The terminal superstructure will be ready in ness. Achieving intra-Africa connectivity is one
2017 with the KKIA upgrade project expected tobe of the key elements to attracting increased FDI.
completed in 2019. In addition, the new greenfield A consideration in attracting more passengers is
Copperbelt International Airport is intended to be regulation and unfortunately, the legal framework
Zambia’s second-largest regional airport and will for open skies still needs to be developed on the
130 TRANSPORT INTERVIEW

national level across Africa with policy framework

that supports the transport sector. There are great
differences in foreign-carrier regulations from
country to country and policies vary, some being
more protectionist than others.
The lack of a strong national carrier is the main
challenge that Zambia is facing. Not only would
connectivity be increased between Zambia and
other African airports, but opening its skies to oth-
er operators would bring down the airfares which
few passengers can afford at present.

BRIG: What should international investors know

when looking to expand their portfolio in Zambia?

Mr Robinson Misitala:
Zambia holds great potential to attract foreign
investors. Zambia enjoys a stable economic and
political environment. With well-developed invest-
ment incentives and progressive banking, insur-
ance and legal policies Zambia is a great invest-
ment destination. Our economy is on a definite
path of diversification and value-addition with a
steadily-growing population and budding middle
class. The national currency, the Zambian Kwa-
cha is stable and investors enjoy full repatriation
of their ROI. Zambia has an unwavering willing-
ness to collaborate with foreign investors in nearly
all sectors of the economy, including tapping into
the investment potential in the transport sector.
Also, the tourism sector is poised to benefit from
the opening of Zambian airports to more carriers.
We have the appropriate infrastructure to wel-
come international airlines and regional low-cost
carriers that can link us to other African cities and
destinations in the Middle East and Europe. Zam-
bia is well-positioned geographically to become a
regional aviation hub and we are just steps away
from support this dream with state-of-art infra-
structure.
 TRANSPORT ARTICLE 131

Proflight Zambia Aims to Help the Zambian Economy Take Off

The Success Story of Proflight

Zambians are proud to see a home-grown, suc- to be a challenging business as several compa-
cessful enterprise that soars above any turbu- nies have been forced to terminate services in the
lence – just like the leading air service Proflight. last two decades, mostly because of economic
constraints.
This year, the thriving company marks its
26th anniversary. Currently, out of a population of around 17 million
in Zambia, only a handful of people can fly or af-
No other private Zambian airline has flourished for ford an air ticket to travel domestically or interna-
so long in the country’s aviation history. Most of tionally.
the Nation’s successful entrepreneurs and busi-
ness owners a like have different passions and Airport taxes also add to the expense of air travel
they translate them into a wealth of ideas and and ticket fares fluctuate due to tax hikes, the ex-
ventures in diverse industries, which is great for change rate and other factors. These taxes are
diversification. needed to invest in the infrastructure required at
the airports, but are prohibitive to the cost of do-
A varied economy enables sustainable cycles mestic air tickets.
of economic activity where industries and busi-
nesses continually feed off one another and grow However, the Airline believes the aviation sector in
larger as the economy expands. Zambia has a lot of potential in terms of growth. In
the last five years, the County has seen massive
In this vein, Proflight, a Zambian-owned airline, renewal and construction of new infrastructure in
has continuously played the role of catalyst for the aviation sector, which will help stir more traffic
diversification by providing business owners and in terms of more investors coming in and out.
their clients a safe, reliable and efficient service
with the variety of planes in its fleet. Proflight Director of Government and industry af-
fairs, Captain Phillip Lemba, told how the airline
The Air Service’s vast network has contributed will look to take advantage by influencing inves-
to the steady diversification of the economy at all tors to come and explore Zambia by using his
corners of Zambia and also to the exports that are company’s reliable service.
the fruits of this phenomenon.
He said: “We can’t wait for the KKIA (Kenneth
Diversification enhances economic growth. How- Kaunda International Airport) to be completed in
ever, for progress to be achieved, capital to grow 2018.
local enterprises are needed. “We want to use the new facility to showcase our
reliable services in a bid to attract more investors.
The air transport industry faces various chal- “We want the airline to improve the quality of life
lenges, including insufficient airport infrastructure by broadening people’s leisure and cultural expe-
across the country, and a shortage of physical and riences.
human resources, as well as limited connectivity. “Furthermore, we want to help boost the tourism
sector and enhance value addition by providing a
Operating an airline in Southern Africa has proved wide choice of holiday destinations in the country.
132 TRANSPORT ARTICLE

The Airline will remain an affordable means to visit in the region’s economy, businesses and tourism.
distant friends and relatives.” In order to boost domestic travel, there is an im-
Expanding the travel market internationally helps mense need to reduce airport taxes in a bid to
boost productivity across the local economy and stabilise and enable domestic airlines to reduce
improved transport links expand the market in fares, encouraging a greater number of local trav-
which companies operate. ellers to fly domestically.

As a result, companies are better able to exploit This will in turn prompt Zambians to travel by air
economies of scale, thereby reducing costs and more frequently as air travel is the most conveni-
able to specialise in areas of comparative advan- ent and quickest form of transport and the best
tage. way to do business.
Doing this could boost intra-African business,
Proflight, over the years, has treasured its capac- trade, forex, tourism as well as cultural exchange.
ity building drive. Training is amongst the critical Proud of its outstanding reputation, Proflight Zam-
components to growing the aviation industry as bia, the country’s leading scheduled airline, from
more professional individuals will be required to its base in Lusaka, flies on its domestic routes
work and utilise the invested resources or infra- to Livingstone, Mfuwe, Lower Zambezi, Ndola,
structure put in place in the sector. Kasama, Kalabo and Solwezi, and regional routes
to Lilongwe in Malawi and Durban in South Africa.
Going from strength to strength, the airline is mov- Many investors will be aware that Africa is one of
ing at jet speed to reach its goal of becoming a the fastest growing continents in terms of interna-
major global airline. tional traffic.
Increasing its fleet, aircraft, staff, and network Proflight Zambia has numerous aircraft in its fleet
across Zambia and the Southern African region, to take the investor to any terrain so that they can
Proflight has received overwhelming response take advantage of Zambia’s favourable
from its customers due to fostering development business climate.
TOURISM
Zambia is home to Largely-untouched national parks and game areas

South Luangwa is home to one of the largest concentrations of wildlife globally

MICE industry a growing aspect of business travel

Victoria Falls: the largest waterfall in the world

134 TOURISM ANALYSIS

Recognising the Potential

Giving our Visitors a Unique African Experience
The Government of Zambia has identified tourism, includ- tional tourist arrivals in 2017, up from 931,782 internation-
ing arts and culture as one of the priority growth sectors al tourist arrivals in 2015. Business tourists were dominant
of the national economy. The tourism sector holds the under the purpose of visit category, contributing 54% and
potential to be a major contributor to socioeconomic de- holiday/leisure was second at 25%. In recent years, Zam-
velopment as an important source of jobs, wealth, and bia has recorded a sharp increase in conference arrivals
competitiveness, particularly in the country’s rural areas at about 9% on a yearly basis. Most of the arriving tourists
and holds major linkages to various other sectors of the represented the Southern African sub-region accounting
economy. As an industry, tourism in Zambia offers large for 76.2% of the total international tourist arrivals, followed
opportunities for a return on investment in infrastructure by Europe with 9.5%, and the Americas with 5.3%. Tour-
development, hotel management, tour operations and ists from Asia contributed 7.7%, while Australia repre-
the meetings, incentives and conferences and exhibitions sented 1.3% to the total arrivals. By 2027, international
(MICE) sub-sectors. Zambia’s key assets include pristine tourist arrivals are forecast to total 1,917,000, generating
and largely untouched national parks and game manage- expenditure of K12.5bn, an increase of 4.0% pa.
“As an industry, tourism ment areas, home to a great diversity of flora and fauna.
in Zambia offers large op- Zambia stands out as one of the prime tourism destina- HOTELS:
portunities for a return on tions in Africa offering a wealth of natural tourism assets – Zambia boasts a wide range of accommodation from
investment” waterfalls, lakes and rivers holding close to 35% of South- five-star hotels and first-class luxury lodges to rustic bush
ern Africa’s total natural water resources, wildlife protected camps, guesthouses and campsites. The total number
areas’ occupying about 10% of the country’s total land of rooms available in Zambia was 43,119 in 2015, with
area, and a sub-tropical climate – a passport to sunshine an average room occupancy rate at 69.8% and an av-
almost throughout the year. Zambia is home of the Victo- erage length of stay of four days. Lusaka accounted
ria Falls, one of the Seven Natural Wonders of the World for 31.7% of the total number of rooms while Southern
and UNESCO site. In addition, Zambia is endowed with Province, home to the mighty Victoria Falls was second
a rich and diverse culture resulting in the occurrence of accounting for 29.1%. Well-known hotelier groups have
more than 30 colourful traditional ceremonies annually. made major investments in hotel development in Zam-
The total contribution of the tourism sector to GDP was bia including The Carlson Rezidor Hotel Group, Marriott,
K15.2bn ($1.4bn), 7.0% of GDP in 2016, and was predict- Accor Hotels, South Africa’s Southern Sun, Protea Hotels
ed to rise by 4.4% in 2017, further increasing to K27.9bn and Sun International, one of Asia’s largest hospitality
($2.6bn), 7.0% of GDP in 2027, The total investment groups Taj Hotels Palaces Resorts and Safaris, as well
recorded in the tourism sector in 2016 reached K1.3bn, as the Mauritius-based Africa Hotel LP with their recent
1.7% of total investment ($0.1bn). It should rise by 7.9% purchase of the landmark Intercontinental Hotel in Lusa-
in 2017, and rise by 3.9% pa over the next ten years to ka. The African Hotel Report, released by Hotel Partners
K2.1bn ($0.2bn) in 2027, 1.5% of total. Africa (HPA), ranked Zambia as the second top destina-
ARRIVALS: tion for hotel developers in Africa in 2015. Zambia with an
The country was expected to attract 1,132,000 interna- average growth of 6.5% per annum in the last six years in
 TOURISM ANALYSIS 135

the hotel industry and a supply of 122 branded bedrooms of plains game and its several unique species of antelope,
per million population represented one of the most lucra- such as Kafue lechwe, black lechwe, and Cookson’s wil-
tive opportunities in Africa in hotel development. In Africa debeest. Zambia Wildlife Authority is responsible for wild-
the supply in Zambia is far below the average supply in life management. In recent years, modest harvest quotas
Southern Africa at 350 bedrooms/million and potential to and tight controls have been imposed on safari activities.
reach the 365 bedrooms/million in the medium term. Three types of licences are permitted in Zambia – the
Classic Safari, with a minimum duration of 14 days, which
NATIONAL PARKS: allows the hunter to hunt all the big game, the Mini Safari
Zambia’s wildlife protected areas occupy about 10% of which allows the client to hunt a maximum of five species,
the country’s total land area. A total of 20 national parks, and the Special Safari which authorize the customer to
34 game management areas and 23 million hectares of hunt specific species such as Kafue lechwe.
land are devoted to the conservation of a spectacular va-
riety of animals. The major national parks include Kafue MICE:
National Park, Lusaka National Park, South Luangwa Zambia has the potential to become a hub and choice
National Park, Mosi-Oa-Tunya Park in Livingstone, and destination for the Meetings, Incentives, Conferences and
Lower Zambezi National Park. The total number of tourist Events (MICE) industry in the Southern African region.
visits to the five national parks was 101,972 in 2015, a The MICE industry has added a growing new dimension
major increase from the previous year. to the sector and with it, the capacity to attract many visi-
Zambia’s wildlife is the foundation of its tourism industry, tors, for both business and leisure. With business travel-
now one of its biggest employers and foreign-exchange ers accounting for more than half of the registered tour-
earners. In the early part of the 20th century the Big Five ists in Zambia, the conference category has continued to
game animals were widespread outside reserves and register the most impressive growth rate of all sub-sectors “Zambia’s wildlife is the
parks and most of Zambia’s rural areas supported wildlife in the industry. Many companies have made plans for foundation of its tourism
at levels currently seen in national parks. Today, the rhi- investing in conference facilities to capture this business industry, now one of its
noceros is almost extinct, elephant, zebra, hippo, and lion segment, which assures high room occupancy rates and biggest employers and
are found almost exclusively in parks, the African buffalo increased consumption of food and beverages, among foreign-exchange earners.”
is found in or close to parks. Of the other large animals, others. Livingstone tops the choice for conference desti-
only the spotted hyena, Nile crocodile, hippopotamus, nations as the Zambian Government has outlined plans
and antelope are found in numbers outside parks. South to transform the town into a premier convention facility.
Luangwa National Park, located in the Luangwa Valley The refurbished Harry Mwanga Nkumbula International
in Eastern Zambia, has one of the largest concentrations Airport is one of the infrastructure upgrades, throughout “Livingstone tops the
of wildlife in the world and, probably, the largest variety of the country and the first step to welcome more visitors to choice for conference
animals and bird life in Africa. the nation’s tourism capital. Adding to the existing confer- destinations.”
ence facilities, The Zambia Institute of Chartered Account-
HUNTING: ants (ZICA) has bought 102 hectares of land to set up
remains an important part of the tourism industry in Zam- a 5,000-seat convention centre, 10 presidential VIP villas
bia. Previously, all hunting was banned in January 2013 and an international golf course at a cost of $350m. Lu-
due to fears of overhunting and wide-spread corruption saka’s Mulungushi International Conference Centre with
within the relevant authorities. The ban was, however, lift- 3000-seat capacity is the leading conference facility pro-
ed for most species in 2014 and 2015 including the dan- vider in Zambia at the moment with various venues for
gerous game – lion, leopard, buffalo and elephant. Zam- conferences, exhibitions, trainings, meetings and social
bia is famous in professional hunters’ circles for a variety happenings. In 2013, Zambia hosted the UNWTO Gen-
136 TOURISM ANALYSIS

eral Assembly and African Development Bank Annual Falls plunge into the Zambezi River at about 550,000
Meeting in 2016 demonstrating its aptitude to host major m³/s. The impact is so intense that the falling water cre-
international events. The country is also set to welcome ates a cloud of vapour that typically rises to over 400 m
the African Union Heads of State Summit in 2022. and can be seen more than 40 km away. Because of this,
the falls have been known for centuries as Mosi – Oa –
Tunya, meaning “The Smoke That Thunders” in Tonga
CULTURAL TOURISM: language. The falls, which are found in the country’s tour-
Zambia is home to a culturally-diverse population. Boast- ist capital of Livingstone in the south of Zambia, were de-
ing 73 local languages, Zambia offers a rich array of clared a World Heritage Site for their unique geological
“Victoria Falls is the largest traditional festivities and events. There are more than and geomorphologic significance. The Victoria Falls area
waterfall in the world , about 20 recognised annual traditional ceremonies in Zambia, is rich in biodiversity. The Victoria Falls is considered the
twice the height of Niagara manifesting customs, social life, rituals, oral history, mate- largest waterfall in the world, with the combined width of
Falls.” rial, and spiritual culture. They provide a valuable insight 1,708 m and height of 108 m, about twice the height of
to a traditional culture that has been passed down from Niagara Falls.
generation to generation. Most of the ceremonies have a
deep meaning, in many cases designed to invoke mem- SHOPPING IN ZAMBIA:
ories of the transformation from childhood to adulthood. Lusaka, the capital city of Zambia, has recently seen a
Most tribes in rural areas still practice harmless initiation tremendous increase in retail space. Lusaka has over
ceremonies for girls, which are generally conducted after 10 large shopping malls dispersed across the various
puberty. Only a few tribes still practice male circumcision neighbourhoods, with Manda Hill, Arcades Shopping Mall
initiation ceremonies and those that occur happen in to- currently undergoing a major upgrade, East Park, Levy,
tal secrecy. The open ceremonies that visitors can watch Garden City, and Makeni Mall among the biggest. The
are those that signify ancient times, when new kingdoms malls host a wide variety of shops ranging from high-end
were being founded by ancient chiefs and are usually boutiques, restaurants, supermarkets, clothing, jewellery,
splendid, colourful affairs with much symbolism in their furniture, cinemas, nightclubs, banks, hotels and service
dancing and drumming. The most famous and glamor- stations. The retail sector has recently received attention
ous - Ku’omboka ceremony - is held in March/April by the from both the investors and the customers alike. Several
Lozi people in Southern Province to mark the migration South African investors have made invested in the retail
from the flooded plains to higher ground at the end of the development sector resulting in increased competition in
rainy season. Zambia’s diverse cultures bring with them the commercial real estate sub-sector. The retail sector in
a wide variety of traditional skills. Crafts can be found in Zambia is supported not only by the growing middle class
great variety ranging from unique musical instruments to of the country; the shopping malls are a natural attraction
high-quality traditional basketry for a wide range of uses for the visitors from the neighbouring countries – Zimba-
– carrying and storage, fishing traps, beer strainers, flour bwe, Malawi, DRC, and Tanzania, reaching almost half
sieves, sleeping and eating mats and a variety of table- a million tourists from their respective countries in 2015
ware. ,who mostly travelled by road.
THE SMOKE THAT THUNDERS:
Victoria Falls, partially located in Zambia is one of the
Seven Natural Wonders of the World. At their peak, the
 THE WILD SIDE

HEAD OFFICE LIVINGSTONE

First Floor Petroda House Tourist Centre, P.O. Box 60342
Corner Kalembwe Close and Great East Road Livingstone, Zambia
P.O. Box 30017, Lusaka, Zambia Tel: +260 213 321404/5
Culture Adventure Wildlife Heritage
Tel: +260 211 229087/ 90. | Fax: +260 211 225174 Fax: +260 213 321487
www.zambia.travel Email:marketing@zambia.travel Email: livingstone@zambia.travel
138 TOURISM INTERVIEW

Marketing Zambia’s Tourism Offering

Felix Chaila, Director General, Zambia Tourism Agency

BRIG: What role does the tourism sector play in de-

veloping Zambia and what are the main target mar-
kets?

Felix Chaila:
The tourism sector plays a crucial role in the socio- and from the new target markets from other emerg-
economic development of Zambia. Our country is ing economies such as India and China. We have
unique in terms of the pristineness of nature, its sa- had great successes in the Indian market in recent
faris and the density of wildlife. We offer the complete years and are welcoming increasingly more of high
experience of Africa with a notable absence of over -caliber Indian tourists that crave the wilderness expe-
commercialisation. Zambia is also leading the sub-re- rience. Because of the large Indian community, and
gion in infrastructure development, with our road and English as the common language, similar historical
airport infrastructure all receiving major upgrades. backgrounds and customs, arriving visitors do not ex-
The tourism industry in Zambia holds an outstanding perience a culture shock. Zambia has much to offer
potential for expansion. Zambia’s cultural heritage is and the numerous adventures in Livingstone such as
the richest in the Southern African region with more the microlite, and helicopter flights, bungee jumping,
than 73 different tribes and more than 50 traditional white water rafting, the river and it’s sunset cruises,
ceremonies, all intricate in their story line. Few coun- and the Royal Livingstone Express train experience
tries can boast the same cultural wealth and provide are just the beginning of what can be experienced.
a feast for a culture lover. The ceremonies, mostly cel-
ebrating the harvest season, have masquerades that
will mesmerise a tourist from anywhere in the world.

We, at Zambia Tourism Agency, recognise that the

global pattern of 80% of the arrivals originating from
the sub-region also applies to Zambia. Our country
borders eight neighbors, is centrally located and eas-
ily accessible from the rest of the Southern African re-
gion which is one of the fastest developing regions in
the world. The overall population of the SADC is ap-
proximately 250 million people with an emerging mid-
dle class of 10% which essentially constitutes a target
market of more than 20 million people. Outside the
sub-region, we are also attracting travelers from our
traditional primary markets – the UK, USA, and EU,
 TOURISM INTERVIEW 139

BRIG: Which sub-sector do you see as the fastest

growing in the Zambian tourism industry?

Felix Chaila:
Zambia recorded it’s highest MICE (Meetings, Incen- in Lusaka and more partnerships between the public
tives, Conferences and Exhibitions) activity in 2016 sector and the private sector are seen in the hospital-
when it hosted the annual meeting of African Devel- ity industry. For example, NAPSA has joined forces
opment Bank in Lusaka and before that the UNWTO with Hilton and South Africa’s Tsogo Sun, with two
Annual Meeting in 2015. This kick started, a myriad of new hotels opening doors in the capital. It is important
other international business meetings and conferenc- to point out that the Zambian Government is promot-
es and now MICE has grown into the most lucrative ing the cluster concept, which promotes a multi-sec-
sector of the tourism industry, which also feeds into toral approach to the development of the country. A
leisure tourism activities. Due to the current limited developed transport network will promote the tourism
capacity, Zambia needs investment in development sector, which in turn, can feed into the retail and other
of hotels and convention centres to realise the full po- sectors. Having said that, we the Government, must
tential of the MICE industry. do more for our general populace to feel the benefits
The MICE industry will transform Zambia. Several of the tourism sector and critical investment
hotelier groups have set up shop in Zambia, mainly is needed.
140

Kupa nkwaanzika. (Chitonga)

To give is to store.
Giving is a form of savings. People to whom you give things will
come to your aid in a time of need.
AGRICULTURE
Generous incentives offered to investors

Vast export opportunities to neighbouring countries

Major growth anticipated due to growing demand

Aquaculture sub-sector poised for growth

142 AGRICULTURE ANALYSIS

Agriculture: An Industry Ripe for Growth

Blossoms Before the Harvest

In Zambia, agriculture and its value chain is an industry to 1,400 mm (19.7 to 55.1 inches) per annum, with the
that is ready to be harvested. Contributing just under dry season with no rain falling in the months of June, July
10% to GDP and over 60% to employment figures, ag- and August. The rains are brought by the Inter-Tropical
riculture and its various sub-sectors are an important part Convergence Zone (ITCZ) and are characterized by oc-
of the country’s economy. Its cool and dry sub-tropical casional severe thunderstorms. The ITCZ is located north
climate and available water resources allow for produc- of Zambia in the dry season (southern hemisphere’s win-
tion throughout the year. The agricultural sector consists ter). It moves southwards during the second half of the
of both small-scale farmers and, large-scale farms and year then northwards in the first half of the year. In some
agribusinesses. Agribusinesses are often diversified years, it moves south of Zambia, resulting in a short-term
and have vertical integration throughout the whole value drought in the north of the country for three to four weeks
chain, a good example and success story is Zambeef. in December. The highest rainfalls are experienced in the
This sector provides a vast variety of business opportu- north, especially the north-west and the north-east, de-
nities from inputs to food production to processing and creasing towards the south with the driest areas in the far
everywhere in between. south west. This small part of the country is considered
semi-arid, although it is situated in the middle Zambezi
INCENTIVES: River valley. The country has numerous lakes and rivers,
This sector receives priority attention from the Govern- as well as underground water resources, thus enabling
ment and it is seen as a driver of employment in rural farmers to irrigate crops during periods when there is in-
areas. There are a number of incentives and tax breaks sufficient rainfall. The area of Zambia’s territory is 75 mil-
for large-scale farm production. These incentives range lion hectares and of this area, 58% or 42 million hectares
from subsidies on establishing the farm to VAT deferment has been classified as having a medium to high potential
and no import duties on certain inputs to reduced tax rates for agricultural production. Currently, only around 15% of
of 10%. Production loans are available from the various this land is under cultivation.
banks in the country. There are also guarantees and se-
curity for investments. CROP AND HORTICULTURAL PRODUCTION:
Zambia’s staple food is maize and this is also the most
CLIMATIC CONDITIONS: cultivated crop. Other large-scale crop production in-
Zambia’s climate would be considered tropical, but due to cludes coffee, cotton, flowers, groundnuts, paprika, rice,
its elevation above sea level, temperatures are reduced, sorghum, sunflower seeds, soybeans, sugar cane, tea,
making the area more a sub-tropical clime. The average tobacco and wheat, amongst others. Zambia is also one
temperature in summer is 30°C, while the average winter of the continent’s greatest certified seed exporters. There
temperature varies around 6 to 12°C. Zambia’s rainfall fol- is an established manufacturing sector in Zambia, which
lows a similar pattern to most other Southern Africa coun- provides various inputs to the agricultural sector, such as
tries, with the wet season occurring when the sun is near irrigation pipes and woven bags for grains. In terms of
its zenith from November to April. Rainfall varies from 500 professional services, there is a private company that per-
 AGRICULTURE ANALYSIS 143

forms soil mapping, testing and sampling as well as leaf tion and are pleasant to work with and are willing to learn.
analysis. In addition, there is the Zambia Agriculture Re-
search Institute, which performs a research and develop- MARKETS:
ment role. As described above, there is a large amount of Zambia has a relatively small local market as people have
unutilised arable land, which has the potential to become low-purchasing power, hence most production is geared
productive farmland. There are various incentives in es- towards being exported. There are a number of free-trade
tablishing new farmlands. These include a guaranteed agreements in place that farmers and agribusinesses can
input tax claim for Vatable agricultural businesses for four and do take advantage of. The main export destinations “there is a large amount
years before production starts, VAT deferment when im- are countries in Southern and East Africa, followed by the of unutilised arable land,
porting certain agricultural equipment and machinery, and United States and Europe. There are liberalised export which has the potential to
no import duty on irrigation equipment as well as reduced policies and export procedures that are simplified and set become productive farm-
import duty on other agricultural equipment. In addition, out. Beyond the normal certifications needed for trans- land.”
there is a farm improvement allowance of 100% on fenc- porting agricultural products across borders, an export
ing and wall work and a farm works allowance of 100% permit is required for maize, sorghum, wheat and soya
for the full cost of clearing vegetation, removing stumps, beans. This is to limit the risk of a food shortage in the
preventing soil erosion, drilling of boreholes, digging of country. Due to long distances to the market, most pro-
wells, aerial and geophysical surveys, and water con- duce is processed on the farm or in the immediate vicinity.
servation. Farmers are also given an allowance of K10m Currently, there is a lack of export infrastructure for highly
if their farm is occupied by farm workers. Farmers who perishable products. This will change as road infrastruc-
grow tea, coffee, bananas, citrus trees and other similar ture improves, existing airports upgraded and when a
crops can claim a development allowance of 10% of their greenfield airport in the Copperbelt is up and running.
expenditure after the profits of these business entities
have been ascertained. OPERATIONAL AGRIBUSINESSES:
The country has several well-established agribusinesses
LIVESTOCK PRODUCTION: that have steadily grown and expanded over the years.
Cattle, chickens, pigs and fish are the main types of live- Zambeef Products Plc is one such company, which has
stock used in the production of meat and associated ani- grown from a small beef-meat outlet to a multinational
mal products. According to Zambia’s landmass, 42% of it company that has fully integrated throughout the value
is suitable for livestock production and 12% of it is suitable chain as well as diversified into other sub sectors of the
for rangeland grazing; the landmass’ potential is far from agriculture sector and expanded operations into other Af-
being adequately used. In terms of production, there is a rican countries. It is a listed public company on the Lusaka
widespread prevalence of contagious diseases amongst Stock Exchange (LuSE) as well as being on the London
livestock in the country, such that commercial farmers Stock Exchange’s Alternative Investment Market (AIM). It
keep their livestock in stalls rather than risk their animals has retail outlets, wholesale centres and fast food outlets,
being exposed to potentially disease-carrying stock. This as well as production plants in other sub-sectors of the
presents an opportunity for the establishment of animal agricultural sector. Its success can best be described in
health and veterinary services to reduce this risk and the words of Francis Grogan, the CEO of Zambeef Prod-
broaden the area of livestock production. In terms of ani- ucts Plc: “The growing demand for agricultural products
mal feed, there is a reduced customs duty on pre-mixes and consumer goods in sub-Saharan Africa together with
and vitamin additives. Due to the distance to suppliers, the increasingly stable political climate in the countries in
most farming operations produce their own animal feed which we operate, creates an exciting platform on which
on site. This is one of the reasons that vertical integration Zambeef can thrive”. Superior Milling Ltd is another suc-
along the agricultural value chain is important and prac- cessful agribusiness and produces the well-known Meal-
tised. In terms of capture fisheries, Zambia could sus- ile brand of maize products, which remains a favourite
tainably double its production to 150,000 metric tons per in the local market due to its high quality and low-priced
year. Aquaculture contributes less than 15% of the current products. Zambia Sugar Plc is another agribusiness that
70,000 tons of total production of fish products. Aquacul- has continued to expand its operations and has doubled
ture is relatively new in the country and this subsector is its production capacity and exports; in additions to its own
poised for growth. farms, it also has an out-grower scheme that enhances its
productivity levels.
LABOUR RESOURCES:
Agriculture and its related activities are the largest em- THREATS:
ployer in Zambia. There is a low cost of labour and a While the Zambian Government has put in place vari-
large available workforce, although the labour is largely ous measures to protect the agricultural industry from a
unskilled. The people of Zambia have a friendly disposi- number of threats, competition and threats to business
144 AGRICULTURE ANALYSIS

will always be there in a free market. The identification Zambia National Farmers’ Union and the Zambia Na-
of these and the development of mitigation strategies to tional Commercial Bank, which provided seasonal loans
reduce their risk is fundamental to success. One of these to small-scale farmers. This was furthered by the Loan-
threats is the subsidised production of agricultural goods A-Cow credit scheme that created accessibility for small-
in developed nations and their subsequent exportation to scale dairy farmers to obtain credit facilities. Small-scale
developing countries. This oversupply can lead to local farmers’ production is often overlooked, but opportunities
producers being unable to market their produce. In the abound in terms of supplying inputs and, relevant post-
same light, there will always be trade and market entry harvest handling and processing technologies as well as
barriers that need to be taken into account when draft- the provision of access to credit and access to markets.
ing one’s business and implementation plans. Another
universal challenge is limiting environmental degradation INVESTMENT OPPORTUNITIES:
and people’s growing awareness to it. A localised threat to The agricultural sector, and its numerous sub-sectors,
business as usual is the increasing demand for transpar- present a wide variety of opportunities in a country whose
ency along the supply chain. Being aware of such issues productive resources are largely underutilised. In terms
is half the problem solved. of farm production itself, large quantities of medium to
high potential agricultural land is available for large-scale
DEVELOPMENT OF THE SMALL-SCALE livestock and crop production. Agricultural inputs and pre-
FARMING SECTOR: paratory works offer another broad variety of opportuni-
There are various strategies that are in place, which are ties; from inputs such as seeds and fertilizer, to the manu-
aimed at increasing this sector’s productivity and improv- facturing of irrigation equipment and farm machinery, to
ing food security. These include increasing the area of farm preparatory work of surveying, clearing and fenc-
smallholder farmers’ lands under irrigation and their level ing. Post-harvest activities add another broad spectrum
of mechanization, improving the agricultural extension of opportunities that includes processing and its related
service, improving access to agricultural inputs, improv- equipment, transportation of produce and market broking.
ing access to market their products, increasing acces- Financing is another aspect that is needed for both small-
sibility to financing and credit, increasing the private holder and large-scale farmers that is poised to expand.
sector’s involvement and implementing environmentally- In an economic sector that is expanding quickly, it is better
sustainable practices. This has led to some success sto- to become established early and to continually reap the
ries. Concerning access and availability of financing and benefits over time rather than sit on the fence and watch
credit for agricultural purposes, the Lima credit scheme other people profit.
was developed through the collaboration between the

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AGRICULTURE ANALYSIS 145
146 AGRICULTURE INTERVIEW

Focused on Building the Sector

Dora Siliya, Minister of Agriculture
BRIG: How is the Ministry working to promote further
investment in the agricultural sector?

Dora Siliya:
The Government of Zambia has started to tread the increase the productivity of our farmers. The Govern-
path of diversification of the economy choosing four ment is also planning to invest in 20 mass irrigation
sectors as priority sectors to achieve this goal. Ag- dams across the country with works on the Mwon-
riculture, together with mining, manufacturing, and boshi and Chikowa dams underway and increase
Tourism have seen a sharp rise in Government fund- allocations to the Irrigation Development Fund. We
ing and incentives. The agriculture industry directly cannot talk about the development in the agriculture
and indirectly employs 70% of the economically ac- sector without talking about linkages to other sectors.
tive population yet accounts for only 9% of Zambia’s With increase in crop production for commodities
GDP. The Government has undertaken an integrated such as maize, wheat, soya and sorghum, it is critical
approach to increase agricultural production in the that other industries such as stock-feed processing
country encompassing key facets of the country’s strengthen the backward linkages with crop agricul-
agricultural sector including agricultural diversifica- ture. Infrastructure development of Zambia plays a
tion, increased food and nutrition security, improved significant role as the developing road infrastructure
production and productivity and; improved agricultural will positively impact the farmers in rural areas. The
research and extension delivery services. Locally, agricultural sector hold huge potential for synergies
our crop offering needs to be diversified. Since the with transport, ICT, manufacturing and other indus-
1990s, Zambia’s crop production has been biased tries.
towards maize, Zambia’s staple food, accounting
for over 60% of total agricultural production and has
exposed the small-scale farmers, who are the main
producers of maize, to weather-related risks, such as
drought. Hence, the current Government has commit-
ted to promote diversification to cash crops such as
cotton, cashew nuts, soya beans, cassava and rice.
The livestock and fisheries sub-sectors will also con-
tinue receiving attention from Government to create a
strong and sustainable economy to improve the wel-
fare of citizens.To further promote the mechanisation
of the industry, we have introduced a zero tax rate in-
centive towards importation of capital goods, such as
tractors, other farm machinery, and its spare parts to
 AGRICULTURE INTERVIEW 147

BRIG: How would you rate the potential of Zambian

agricultural exports to the SADC region?

Dora Siliya:
Zambia must begin to look beyond its borders for receipt systems, savings banks and co-operatives.
markets for its locally-produced commodities to earn Zambian farmers have done well in making strides in
the much-needed foreign exchange to spur the coun- the neighbouring countries of, the DRC, Rwanda and
try’s economic development. There are three key ar- Malawi. Our Government needs to develop deeper
eas Zambia’s agriculture industry needs to work on to synergies with our neighbours and formalise trade
become a regional food basket. Firstly, our farmers protocols and procedures to harness Zambia’s com-
need to embrace modern methods and technologies parative advantage in trade over others. The DRC
to transform Zambia. Secondly, our country needs the market holds a large, untapped potential for Zambian
improvement of value addition through agro-process- farmers. The DRC and Zambia have been successful
ing. Primary agricultural products should be in sharing challenges through stakeholder’s meetings
transformed into high-value products. Thirdly, we on how best to resolve and handle the matters being
should focus on improved access to finance which faced by traders, especially smuggling, which results
can be done by providing broad-based credit and in both governments losing valuable revenue from the
finance to smallholder farmers through warehouse ongoing trade..
148 AGRICULTURE ARTICLE

ZAMBEEF
A proudly Zambian company that’s feeding the nation

Zambia’s agriculture sector offers unique opportuni- zambique, Botswana, Zimbabwe and South Africa in
ties for investment. The country is endowed with nu- Africa as well as China, Hong Kong and Vietnam in
merous natural resources that make it ideal for agro- Asia. Apart from Zambia, the Group has established
based activities; it has an abundance of: fertile land, operational bases, as well as Shoprite in-store butch-
water resources, a vast pool of small-scale farmers eries, in West Africa in Nigeria and Ghana.
and outgrowers, and a favourable climate coupled
with a growing population. Livestock is another one of the sub-sectors with mas-
sive potential. In terms of cattle, Zambia has a very
In keeping with its development agenda, Zambia is small beef herd, 3.5 million head of cattle, while the
looking to diversify its economy and is increasingly country has the capacity to carry at least 12 to 15
focusing on agriculture as one of the key sectors. million head. Tanzania, which has a 10% larger land
Agriculture and agri-processing will serve to generate mass, has a national herd of approximately 23 million
wealth for farmers and create employment opportu- cattle.
nities for many as demand for food and agriculture-
based products in Africa is expected to reach $1 tril- Zambeef is one of the companies helping to achieved
lion by 2030 and Zambia can tap into this opportunity self-sufficiency in beef. Years of working with small
by ensuring that sustainable policies on issues, such and medium-scale farmers across the country has
as irrigation are in place in order to reduce uncertainty positioned the company as Zambia’s leading beef
in production for example. provider. There is enormous potential to grow the lo-
cal beef industry and extend this supply to the whole
Zambia is already self-sufficient in the production region.
of all the basic foodstuffs such as maize, wheat,
soya, beef, chicken, dairy and pork, which is a major Zambeef has a deliberate policy for ensuring that all
achievement over the last 20 to 30 years. Today, be- its beef, dairy, poultry and pork are sourced from lo-
ing ‘landlocked’ can be considered to our advantage cal farmers in addition to its in-house production. The
as the country stands as a central point of access to meat and dairy giant provides a huge and ready mar-
surrounding markets. There is need for continuous ket for local produce as well as links to other markets
improvement in the sector so that we can export any through its vast retail and distribution network.
surplus.
The Southern Africa Development Community
(SADC) and Common Market for Eastern and South-
ern Africa (COMESA) countries also hold massive Zambeef has a large row cropping operation – prin-
opportunities for export activities for Zambia. cipally maize, soya beans and wheat with approxi-
Zambeef currently exports to Kenya, Angola, the mately 7,971 hectares of row crops under irrigation,
Democratic Republic of Congo (DRC), Malawi, Mo- planted twice a year and a further 8,623 hectares of
 AGRICULTURE ARTICLE 149

rain-fed/dry-land crops available for planting annually. at the moment are tied down to production and post-
harvest efficiencies. Value addition is also another vi-
The establishment of the Ministry of Fisheries and tal component that needs attention with more farmers
Livestock has also helped the cause of the Zambian moving up from just primary production into process-
livestock sector and hopefully the necessary resourc- ing as well.
es and support for Veterinary Services and extra ex-
tension officers will materialize as a result. Access to long-term capital remains a crucial factor
in the diversification and growth of Zambia’s agricul-
There is much scope for the establishment and growth ture sector. When done right, partnerships between
of more home-grown companies such as Zambeef. Zambian-owned businesses and investors can serve
Investing and developing small holders capacity will to further strengthen and contribute positively to the
be a key part of developing the sector. In the case of local economy as is the case with the Zambeef - CDC
cattle in Zambia, approximately 95% is in the hands investment, which enabled the food company to buy
of small-scale farmers. outstanding shares in both ZamChick and ZamHatch
at a cost of $23m, further consolidating its position as
As One of its leading and largest integrated agribusi- a local company.
nesses and multinational conglomerate, Zambeef
generates considerable foreign exchange flows for By creating and maintaining such enabling environ-
the country, boosting Zambia’s economic fortunes, ments, ready access to markets and building capacity
generates tax as well as creates employment. A sig- among local farmers, Zambia can be a food basket
nificant percentage of its shares are owned by local for the region and surrounding countries.
institutional investors and pension funds, including
NAPSA. It is also undoubtedly one of the country’s The time and environment are right for investment as
largest employers with over 7,000 staff, 99.6% of value addition and industrialisation become a key fo-
whom are Zambians. cus area for the sector. The private sector remains a
key component in facilitating investment in the sector
As a food company, Zambeef’s focus is very much and so more public-private partnerships (PPPs) are
market driven, with the company continually investing likely to be involved in more of the capital-intensive
in its growing retail and distribution network and deliv- projects. We can certainly expect more innovation
ering local and quality fresh foods that are affordable and development in the agriculture sector over the
to customers across the country. next few years.
Some of the major challenges facing the sector
150

Panakotamene mbwa panalepe, ulimi wambwa katwo

mona. (Lozi / Luyana)
A dog has been bending over a long time, yet its agricultural
yield is never seen.
Do not waste one’s time or money on a useless or unprofitable
venture.
MINING
Mining sector the pivotal part of Zambian economy

Widely diversified mineral offering

Oil blocks for prospecting offered by Government

Strong push for increased local, downstream benefication

152 MINING ANALYSIS

Geologically Speaking
We are Walking on Wealth
BACKGROUND OF THE MINING SECTOR: Although copper has played the main role in the sec-
The country has a commercial mining history of over 90 tor, Zambia’s endowment of mineral resources is rather
years, with copper being the predominant product as well substantial. The country’s mineral wealth includes other
as the mainstay of the economy and, foreign direct invest- metals, gemstones, industrial minerals and, energy, agri-
ment and earnings. Copper has played a major role in cultural and building minerals. The production of metallic
the economic and social development of the country. To minerals continues to dominate the mining sector, but the
this day, mining remains a central facet of the Zambian full potential of metallic minerals, as well as other identi-
economy. The sector has had various reforms through- fied mineral deposits, is yet to be realised, which creates
out its history. Mining initially started under British-colonial greater opportunities for exploration.
rule. Zambia gained independence in 1964 and by 1968,
nationalisation of resources began, which coincided with GEOLOGY OF THE COUNTRY:
a slump in mineral prices, by 1990, to fund social devel- The considerable mineral deposits and exploration poten-
opment and pressure from the IMF for economic reform tial of Zambia is due to its extremely diverse geological
to repay foreign-debt obligations, privatisation of various terrains. This is due to its unique geographic location. The
government parastatals was introduced, including the geological evolution of the country and its complexities are
mining parastatal. Following the completion of privatisa- chiefly due to tectono-thermal events between the mas-
tion of the mining sector in the early 2000s, in conjunction sive Kasai Craton (to the West), the Zimbabwe-Kaapvaal
with an increase in demand of metals, the mining industry Craton (to the South) and the Tanzania Craton (to the
had a sharp recovery. During the surge in commodity pric- North). The geological evolution is due to inter-cratonic
es in the late 2000s, major commitments by large mining dislocations and their buttressing effects on stable blocks.
companies were made, which resulted in the surpassing The four main geological formations are the Congo Ba-
of the 1970’s record peak production of 700,000 tons. Al- sin, Forest Sandstone, Karoo Supergroup and Katanga
though the global commodity market weakened towards Supergroup, of which the latter contributes greatly to the
the end of the 2000s, Zambia continued to receive foreign country’s metallic minerals. Although approximately 80%
direct investment in the sector. This led to a peak produc- of the country has been mapped, a significant proportion
tion record of 800,000 tons in 2013, with expectations of is unpublished, which includes the reconnaissance map-
production reaching 1,500,000 tons during 2018, due to ping of the north-eastern and western parts of Zambia.
prior investment commitments and commissioned pro- Generally, regional mapping is carried out at a scale of
jects coming online. The sector has thus been a principal 1:50 000 and published at a scale of 1:100 000 as quar-
employer and economic contributor. During 2016, Zam- ter degree sheets, of which a report is accompanied. In
bia was rated as the world’s seventh greatest producer terms of quarter degree sheets, there are around 260
of copper and second greatest In Africa; behind its neigh- quarter degree sheets, approximately 60 of these cover
bour, the Democratic Republic of the Congo. the Kalahari of Western Zambia. Of the 260 quarter de-
 MINING ANALYSIS 153

gree sheets, over 100 have been published and of the and intrusion emplacement, through the lower Katanga
solid geology, over 60% has been mapped at a scale of succession, have generated a considerable number of
1:100 000. There are some available reconnaissance lode, stock work, breccias and skarn deposits). Other
maps at a scale of 1:250 000. There is a unique geologi- types of deposit can be found in the disseminated cop-
cal map at a scale of 1:1 000 000, which is divided into per mineralisation in the granites and aplites around the
four separate sheets for ease of use. The tenements map Mkushi area in central Zambia as well as the copper-
showing the locations of exploration and mining licences bearing stratiform sulphides in the Lusaka area. Over one
can be accessed by prospective investors and interested billion tons of copper-cobalt ore has been extracted from
parties at the Geological Survey Department within the the mines on the Copperbelt, with conservative estima-
Ministry of Mines. tions of an additional two billion tons to be potentially-eco-
nomically exploited.
EXPLORATION POTENTIAL: With regards to gold, over 300 gold occurrences have
Zambia’s unique geological evolution and its diversity been recorded, although the majority are prospects. The
of identified mineral resource deposits are a sign of the greatest historical producers have been Dunrobin (990
country’s substantial potential for further exploration and kg) and Matala (225 kg) in the Mumbwa area, Jessie
discovery of new economic resource occurrences; the (390 kg) in the Rufunsa area and Sasare (390 kg) in east-
large number of new exploration companies working ern Zambia. The majority of these deposits are lode-type
throughout the country can confirm this potential. Exist- bodies, which are associated with the Mwembeshi Shear
ing mining companies have both short- and long-term Zone and related syntectonic intrusions. A significant oc-
exploration programmes; this is in order to determine currence of gold mineralisation, in conjunction with copper
additional potential in currently-mined deposits and in the and uranium, in major thrust zones close to the base of
discovery of new deposits. The Katanga Supergroup has the Katanga succession.
the exploration potential for copper-cobalt, gold, uranium, With respect to iron ore, there are provisional estimations
base metals mineralisation and other industrial minerals of greater than 900 Mt, with an iron content of over 50%;
and constitutes areas such as the Bangweulu Block, some individual deposits have been estimated to be up to
Choma-Kalomo Block, Hook Granite Complex, Irumide 200 Mt in size. This occurs primarily as sedimentary iron-
Belt, Katanga Terrain, Kafue Anticline, Mozambique Belt, stones in the lower-Katanga Mine Series successions in
Mwembeshi Shear Zone and the Zambezi Belt. The Ka- central and western Zambia. In western Zambia, particu-
roo Supergroup’s potential for energy minerals and hy- larly around the Hook Granite Complex, there are small,
drocarbons - found in the Kafue, Luangwa and Zambezi high-grade skarn and replacement deposits, which are
Basins - are currently being determined. Since these ba- associated with Pan-African felsic and mafic intrusions
sins known prospects for oil and gas, they have already that have penetrated the lower Katanga succession.
been demarcated into prospecting oil blocks. In terms of manganese, although occurrences are nu-
merous, they are mostly small and occur as tabular, strati-
INVESTMENT OPPORTUNITIES IN THE MINING form and exhalative deposits, normally within Basement
SECTOR: and Muva sequences, and supergene enrichments that
The country’s broad spectrum of mineral resources pre- either cap low-grade sedimentary accumulations or are
sent exceptional investment opportunities in the prospect- concentrated within sub-vertical fractures with limited ver-
ing, extraction and processing of these minerals. Due to tical extent. The sub-sector is characterised by privately-
the broad spectrum of mineral resources, these will be owned companies and small-scale miners, with the ma-
discussed according to metallic minerals, gemstones, in- jority of operations centralised around the town of Mansa
dustrial minerals and energy minerals. in the Luapula Province in the north of Zambia.
Regarding nickel and platinum group elements, there are
METALLIC MINERALS: orthomagmatic nickel occurrences in the Basement se-
This group consists of copper and cobalt, gold, iron ore, quences to the east and south of Lusaka. There are sedi-
manganese, nickel and platinum group elements, and ment-hosted Nickel deposits in Mwashia and Mine Series
zinc and Lead. In terms of copper and cobalt, the cop- rocks of north-western Zambia, which are associated with
per-cobalt mineralisation is strata bound within arenites, gabbroic intrusions and frequently show evidence of hy-
shales and carbonate rocks of the lower-Katanga Mine drothermal enrichment. In addition, minor Platinum Group
Series Group. Other deposits have been identified in the elements are produced as a by-product of the refinement
thrust zones of north-western Zambia (these represent
zones of detachment between Basement and Katanga
sequences) and in western and central Zambia (shearing
154 MINING ANALYSIS

of copper as well as from the Munali deposit to the south variously accompanied by copper and gold and almost
of Lusaka. invariably occurs in kyanite-bearing schists. These are
With regards to zinc and lead, the Kabwe deposit in cen- now known to be represented in major thrust zones de-
tral Zambia has been mined for carbonate-hosted Zn-Pb veloped along the Basement-Katanga contact and in
ore, which averaged around 25% Zn and 15% Pb in 11 propagated up-sequence. Large exploration activities
Mt. In the same stratigraphic position lie CU-Pb-Zn de- are underway in southern Zambia and in the Siavonga
posits in Basement and Muva sequences in the south- area of the Gwembe valley. Regarding coal, there are
east of Zambia. Occurrences have been recorded of substantial coal resources and coal has been produced
carbonate-hosted Zn-Pb mineralisation in Lower Roan since 1967 from the Maamba mine in southern Zambia.
limestone. Deposits and occurrences are confined exclusively to the
lower-Karoo Gwembe Formation that is within a series
GEMSTONES: of fault-controlled basins that comprise the Mid-Zambezi
Regarding diamonds, alluvial diamonds have been re- Rift Valley. In addition, thin coal seams and carbonaceous
corded throughout parts of north-eastern and western shales have been identified in the Gwembe Formation of
Zambia. Kimberlite and lamproite intrusions occur within the Luangwa and Luano-Lukusashi valleys, and in the
and near to the western flank of the Luangwa River eastern part of the Barotse Basin in the west of Zambia.
and in southern Zambia, however, no diamond-bearing With regards to hydrocarbons, two major exploration pro-
diatremes have been discovered. In terms of emeralds, grammes had been undertaken between 1986 and 1991
Zambia’s Ndola region supplies approximately 20% of within the Luangwa Rift Valley, of which one was termi-
global production, which are prized for their deep green nated before intersecting favourable reservoir horizons.
colour. Other gemstones mined include aquamarine and Potential for oil generation is present within the Karoo-
tourmaline, which are mined in the Lundazi and Nyimba age graben in both the Luangwa and mid-Zambezi val-
areas, while amethyst is mined in the Mwakambiko Hills leys. Recent exploration work, which used the Microbial
near Lake Kariba. Prospecting for Oil and Gas technique, revealed that the
Okavango and North Luangwa basins have potential for
INDUSTRIAL MINERALS: oil and gas exploration. Oil blocks for prospecting by the
The country has a wide range of industrial minerals. private sector have been tendered by the Government.
These will be used to support the anticipated growth in
the agricultural, manufacturing and mining sectors. These BENEFICIATION:
minerals include apatite (an important source of phos- There is a strong push by some role players in the sec-
phate), asbestos, barite, dimension stone, feldspars, fluo- tor for increased downstream beneficiation. This is for the
rite, graphite, gypsum, kyanite, limestone and dolomite creation of finished products and greater employment op-
(already identified as suitable for agricultural and cement portunities. Downstream beneficiation is presently under-
use), silica sand (high-quality glass sand is currently being taken to various degrees where feasible. Upstream and
exploited) and talc. There are also considerable amounts side stream beneficiation has been suggested as an al-
of ball clay and brick clay deposits. However, these have ternative route for generating employment opportunities.
rarely undergone bench tests and firing tests. Throughout This involves the creation of supplier industries around
the country, brick clays are used at an artisanal level. mines and other service industries.

ENERGY MINERALS: ADMINISTRATION OF THE SECTOR:

These mainly consist of uranium, coal and hydrocarbons The Ministry of Mines, Energy and Water Development
(oil and gas). In terms of uranium, three significant types governs the sector according to the Laws of Zambia.
of uranium occurrence are recorded in Karoo sandstones There are different types of mining and prospecting li-
that are associated with the copper mineralisation of the cences, each requiring specific documents or data, place
Copperbelt and the structurally-controlled mineralisation of application, validity of licences, maximum surface area
in the Basement domes to the north-west of the coun- and rights granted. There are different tax regimes for
try. Uranium mineralisation in the Basement domes is open-cast and underground mining as well as different
 MINING ANALYSIS 155

incentives according to the type of mineral and operation. its contribution to the economy and society.The Zambian
Incentives are governed by the Zambia Development Mining Magazine is another publication that details devel-
Agency Act. opments in the sector and leading players in the industry.

INDUSTRY BODIES AND INFORMATION SOURCES: SUSTAINABILITY:

The Zambian Development Agency is a principle source Sustainability and environmental protection is a grow-
of guidance with investing in the country and what this en- ing demand across the globe with communities gaining
tails. The Chamber of Mines of Zambia is the main indus- ever-greater insight into their rights, protection and legal
try body. The objectives and establishment of the Cham- recourse. Zambia is no stranger to this development with
ber “was for the purposes of promoting the interests of communities, which were negatively affected by miners’
its members, and encouraging, protecting, and fostering negligent practices, having won legal recourse. However,
the mining industry of Zambia and doing everything nec- this is not an industry norm, with mining companies con-
esary and advisable for the advancement/achievement of tributing greatly to community development, from building
those objectives.” It operates an industry website, Mining well-engineered bridges to funding community-develop-
for Zambia, which is aimed at promoting a better under- ment initiatives in farming and manufacturing.
standing of the Zambian mining industry. It highlights key
industry issues, and shares information about mining and
156 MINING INTERVIEW

Pros and Cons

Nathan Chishimba, President, Chamber of Mines

BRIG: How can Zambia pursue development while BRIG: What are the greatest opportunities and obsta-
ensuring that it is done in a sustainable manner? cles of Zambia’s mining industry?

Nathan Chishimba: Nathan Chishimba:

As Zambia has undergone cyclical development of Zambia’s mineralisation is world-class, and the coun-
difficulties and growth entwined, we need to develop try is geo-politically well placed, a conflict-free zone
a long-term strategy for the sectors that best support with an educated population. The legal landscape
progress. Historically, the mining sector has lead the and the fiscal regime are very straight-forward and
economy and, in my opinion, our country should use the current government provides an open and en-
the competitive advantage of the mineral wealth to couraging environment for businesses to operate. A
stimulate other sectors. We, at Barrick, use our suc- few challenges persist, however. The fiscal regime for
cess in the mining industry to expand the opportuni- the mining industry has undergone eight changes in
ties in the local communities whether through pro- five years which, in turn created a lot of distress. One
moting businesses, trading with the mine or through still feels the impact of the nationalisation of mines
building sustainable livelihoods for the community. earlier in Zambia’s history. The current Government,
however is working on creating a stable fiscal and le-
BRIG: What are the success stories in Zambia’s min- gal framework for the mining industry however some
ing sector that exemplify effective FDI? of its aspects are harsher than elsewhere in the world.
Together with the Government, we, the private sec-
Nathan Chishimba: tor, have to jointly address Zambia’s competitiveness
The output of the mining sector declined significantly globally and to ensure the sustainability of the sector.
in 2000, decreasing from 700,000 metric tons to
200,000 tons per year. Almost two decades later, we
are back to producing 800,000 metric tons. All the
mining companies currently operating in Zambia are
success stories – Lumwana, for example, was the
first greenfield project in Zambia after independence,
and Kansanchi mine, operated by FQML, was reo-
pened after a prolonged period of stagnancy. Zam-
bia also has a very vibrant gemstone sub-sector and,
moreover the potential to diversify beyond copper re-
mains largely untapped.
 MINING INTERVIEW 157

BRIG: What can Zambia do to ensure a steady sup- BRIG: How can the Government and the private
ply of human capital to fulfil industry needs? sector make Zambia more competitive globally?

Nathan Chishimba: Nathan Chishimba:

There are several issues that need to be addressed. The government should continue developing a game
The sector needs artisanal skills and the current Gov- plan, a viable strategy to ensure that business is easy
ernment is on course to create an effective framework to do in Zambia and not create policies that inhibit the
for technical and vocational training. Zambia needs private sector’s growth. For the mining sector, it is es-
education at the tertiary level to be strategically linked sential to attract more resources in exploration and
to a framework that produces skills on a constant ba- create much needed diversification in mining. The
sis to equip the professionals with the skills that are competitiveness of the country is largely subject to
on par with the newest technologies used in the in- Government policies.
dustry. The industry and the learning institutions need
to collaborate for achieving modern expertise and
exposure of the education sector to the practices of
modern mining.
158 MINING ARTICLE

First Quantum Minerals

Providing Rich Seam of Community Projects

The true economic growth of a country is reflected in The education package extends from early-childhood
its state of health, education,agriculture and the qual- education programmes, through all levels of school-
ity of life that its citizens enjoy. Besides Government, ing, to its Kwambula Training at the Solwezi Trades
the private sector plays an important role in nurturing Training Institute (SOTTI). The dramatic improvement
the growth of a nation. in standards comes on the back of a $50m invest-
First Quantum Minerals (FQM), through its Kansan- ment in North-Western Province education by the
shi Foundation in Solwezi and Trident Foundation in country’s largest miner since 2005 under its School
Kalumbila, has stepped up its campaign to end pov- Improvement Programme.
erty, fight inequality and tackle climate change, while Teacher training and an extra 48,000 books have im-
ensuring that no one is left behind in the communities proved literacy levels by 50% in Kansanshi schools
where it operates. supported by First Quantum Minerals in the last four
The company has aligned its community initiatives years.
with every one of the United Nation’s Sustainable
Development Goals (SDGs) in a move that puts the CONSERVATION FARMING:
mining giant at the forefront of best practice in private More than 3,700 farmers are trained and supported
sector social investment locally and globally. by the conservation farming projects surrounding the
company’s Sentinel and Kansanshi mines in North-
HEALTH: Western Province.
A responsible firm supports the health and well-being
of its employees and the communities where it oper- LIVELIHOODS:
ates. Besides provision of clinics, and extensive HIV First Quantum’s support for self-financing community
testing, prevention and treatment programmes, the banks is a natural complement to the company’s con-
mining group has taken a two-pronged approach to servation farming programme, as farmers who adopt
malaria, ensuring people are tested and treated, while sustainable techniques to grow more produce also
also working on prevention measures to reduce the seek micro-credit to finance their inputs or the cost of
incidence of mosquitoes that carry malaria. getting goods to market.

EDUCATION:
The mining firm believes that a good education is not
just about offering academic opportunities, but one
that provides the chance for all students learn life
skills.
 MINING ARTICLE 159

EMPLOYMENT:
Consistent with FQM’s local employment policy 2017 Environmental and Climate Change Awards for
aimed at giving preference to people from surround- demonstrating commitment to implementing green
ing communities, 1,053 of the Sentinel production- initiatives, implementing a strong environmental com-
level employees are from North-Western Province munity outreach programme and applying effort suffi-
out of the total direct workforce of 2,579 at Sentinel. cient to meet environmental standards by making use
Sentinel’s sister mine, Kansanshi, employs 5,140 di- of clean technology, waste minimisation and pollution
rect employees. The setting-up of the Kalumbila Multi- prevention.
Facility Economic Zone is expected to contribute to
the growth of medium to large industries in Kalumbila, ECONOMIC IMPACT:
while also increasing job opportunities through spin- Taxes paid by First Quantum in Zambia now amounts
off commercial activities. to $3.5bn, dividends paid to Zambia Consolidated
Copper Mines Investment Holding (ZCCM-IH) is in
ENVIRONMENT: excess of $200m, and an investment in Corporate
The company has continued maintaining the equi- Social Responsibility of $100m, meaning a total in-
librium in its environmental responsibility and social vestment in Zambia in excess of $5bn and delivering
sustainability, while ensuring that effective conser- tangible social improvement to thousands of Zambi-
vational management is a corporate priority, leaving ans.
a positive legacy in the communities affected by its
mining operations. The mine was recognised at the These are the irrefutable facts – what is good for the
Zambia Environmental Management Agency (ZEMA) investor is good for Zambia.
160

Kufula mwa manamani. (Lozi / Luyana)

To graze amongst calves.
To do things that are below one’s capabilities or expectations.
When someone is denied opportunities or fails to take them.
CONSTRUCTION & REAL ESTATE
Array of PPP opportunities lined up

Rapid population growth feeds demand for affordable housing

Declining interest rates pave way for growth in mortgage market

Increased demand for commercial property in regional centres

162 CONSTRUCTION ANALYSIS

Building Zambia and Going Strong

Infrastructural Development Key Driver of Demand
An indicator of economic health and a large ele- the Ministry of Local Government & Housing, is in the
ment of the national growth, construction has long process of building 4,000 housing units for public service
been a key driver of the Zambian economy. The workers as the Public-Private-Partnership project. The
construction sector, as a result of planned investments, Zambian Road Development Agency is promoting
grew between 11 and 12% from 2013 to 2015, accord- a large-scale infrastructure project called Link 8000,
ing the World Bank. The Zambian Government has which in its first phase proposed to build 1,500 km
pledged major investment in infrastructure to unleash of roads within Zambia, amongst others Private clients
the potential in tourism, agriculture and industry, address developing large-scale industrial or extraction facilities
housing needs and increase jobs in the sector. Accord- also finance large-scale projects. The large-scale Gov-
ing to the Zambia Development Agency (ZDA), the ernment construction projects are generally awarded to
“With a pipeline of public- country recorded $3.3bn in Foreign Direct Investments and performed by foreign-owned construction compa-
private partnership projects mainly in the construction sector in 2014. With a pipeline nies. These companies are awarded projects because of
worth $22bn, the govern- of public-private partnership projects worth $22bn, the their ability to submit comprehensive tenders, their techni-
ment is wooing internation- Government is wooing international investors in sev- cal capacity, the financial instruments that fund start-up
al investors in several eral sectors, including construction and infrastructure de- works, the acquisition of large-scale machinery and at
sectors.” velopment. According to Zambia’s Vision 2030, the total times, finance the project itself. Some local construc-
housing unit backlog is about one million and that tion companies are awarded Government small and
110,000 dwelling units are required annually to clear medium-scale construction, maintenance, and renova-
the backlog over the next ten years. To satisfy new tion projects.
demand for houses all over the country, a similar num-
ber is required to be constructed annually. DEMAND DRIVERS:
The industry is expected to grow, driven by invest-
FACTS: ment in residential, commercial and office space, and
The construction industry’s share of total GDP stood at the implementation of PPPs and large-scale publicly
27.5% in 2014, making it the largest industrial sector in funded infrastructure. The growth of disposable income
Zambia. While in 2015 and 2016, expansion slowed of the budding middle class will boost construction of resi-
due to the downturn in the copper price, the construc- dential buildings in the capital Lusaka and also in other
tion industry was boosted by the election outcome provinces, such as the Copperbelt. The Link 8000, the
in 2016 restored investor confidence in the sector. Out construction of the Batoka Gorge hydropower plant
of the total $3.4bn recorded in 2016, construction and and the major upgrades at the Kenneth Kaunda In-
real estate sector attracted pledges worth more than ternational Airport as well as the construction of the
$300m. The Government acts as the principal cli- new greenfield airport in Ndola lead the Government
ent to most of the National Council of Construction commissioned infrastructure development, which in
(NCC) registered building contractors. The Department turn, will necessitate residential, commercial, and indus-
of Housing Development, which is under the remit of trial facilities, further supporting demand.
 CONSTRUCTION ANALYSIS 163

HOUSING:
Like many emerging markets, Zambia struggles with the system. Also, building regulations remain too complex
provision of affordable housing. The national housing to promote affordable housing development by low in-
deficit stands at more than 2 million units and is further come groups.
amplified by rapid urbanisation and population growth Affordability and access to financial instruments for “The national housing
rates. Existing Government policies have been futile in housing finance is another impediment in Zambia’s deficit stands at more than
ensuring housing finance, access to land and provision real estate market. Mortgage financing remains the key 2 million units.”
of skilled labour, building materials and infrastructure. De- source of formal housing finance. Major banks, such
spite having one of the most progressive laws and as FNB, Stanbic Bank and Barclays, as well as several
policies in the form of the National Housing Authority building societies are major lenders to the formal sector.
Act, the Housing Act and the 1996 Housing Policy, Zam- Residential mortgages have shown impressive growth in
bia is still to achieve its objectives of producing sufficient the recent years, climbing from K298.7m ($57m) in 2013
affordable housing. to K1,493m ($287m) in July 2014. However, the high
Zambia’s existing housing stock is estimated at 2.5 interest rates ranging between 14 to 17% and short loan
million units, of which 64% is traditional housing, while repayment terms from 2 to 10 years means only a small
36% (or about 800,000 units) is urban housing. About portion of the general population can access the finance.
28.5% of urban housing is detached (single units);
20% is traditional housing and 21.5% is improved The shortage of quality housing in the high -end real
traditional huts. About 40% of the urban housing is good estate market has been the driver of several develop-
quality housing while 60% is substandard housing. In ments of modern cluster-style and gated communi-
Lusaka, nearly 70% of all housing stock is substand- ties. Both, foreign and local investment have permitted
ard and informal and accommodates over two thirds of the development of mixed-use real estate developments
the city’s population on 20% of residential land. Zambia such as Roma Park Industrial (residential, commercial,
has an estimated population of 15.4 million which is light industrial development), Nkwashi (residential,
growing rapidly at a rate of 3.2 % per annum and an commercial) and Kingsland City (residential, commer-
urban population that is growing at 4.2% per annum. cial).
The high rate of population growth and urbanisation in Affordable housing will receive a needed boost with
Zambia necessitates clear urban policy guidelines and two significant investment pledges made recently by
strategies to guide housing and urban Amer International Group of China and Magcor Inter-
development. national Inc’s local subsidiary. worth over $4Bn. With
construction set to begin in 2018, both companies
Due to low incomes, over two thirds of Zambians have signed Memoranda of Understanding with the
would need to spend more than the global afford- state-run National Housing Authority.
ability threshold of 30 to 40% of income to access quality
housing. According to the Centre for Affordable Housing
Finance in Africa, in 2015, the average household income
needed to buy the cheapest house in Zambia is $36,960.
Yet the current average annual household income is only
$ 5,102, and the cheapest newly built house by a for-
mal developer costs $65,000. ZIPAR, in 2015, has es-
timated that low income households in urban areas can TOURISM:
afford a house costing between K61,300 and K100,000 Zambia is targeting an increase in foreign tourist ar-
($ 6,584 – $10,741), while households in rural areas can rivals from 1,132,000 in 2017 to 1,917,000 in 2027,
afford a house costing K24 ,900 ($2 ,674). In 2014, with an annual increase of 4%. In preparation, the private
seven percent of the population with average monthly sector is gearing itself up to construct additional hotels,
household expenditure above K4,655 ($500) spent as apartments, lodges and conference centres. For its
much as 50% of their income on rentals. About 30%, part, the Government recognises major investment
or 4,506,300 people, with an average monthly ex- is required in tourism infrastructure and is prioritizing
penditure between K2,793 to K4,655 ($ 300 to $500) refurbishment of airports and roads. Road expansion to
spent 30% on rentals while 63%, with a monthly major tourism sites is part of the Link 8000 initiative with its
expenditure of less than K2 ,793 ($300) spend up to first phase of 1,500 km of roads expected to be complet-
40% of their monthly income on rentals. ed in 2018. Also, the major upgrades currently expanding
Access to land remains a key challenge with long the aviation infrastructure of the country is a confirmation
cumbersome procedures, bureaucracy, and poor qual- of Zambia’s readiness to receive more tourists in the near
ity of services in formal land allocation and delivery future.
164 CONSTRUCTION ANALYSIS

BUILDING MATERIALS:
The shortage of affordable building materials has been government timber-forest plantations. Saw-millers buy
one of the key long-term impediments in Zambia’s con- timber trees based on a quota system, which favours
struction sector. The market, however, received a major micro- and small-scale saw-mills, though this often
boost in 2015 with the opening of Dangote’s cement severely restricts their ability to grow into larger, more ef-
plant in Ndola, which resulted in a major price drop ficient businesses. The total demand for timber in Zambia
in cement from around K90 to K60 in 2017. Zambia is 600,000 m³ per annum, 170,000 m³ more than the
currently has 14 cement manufacturing companies, local annual supply of 430,000 m³. The demand for
“The market, received a Dangote Quarries Zambia Limited, Lafarge Cement and timber is increasing in conjunction with growth in the con-
major boost in 2015 with Zambezi Portland Cement, being the major contribu- struction sector and the vast shortfall in domestic supply,
the opening of Dangote tors to the construction sector, collectively producing is a constraint to growth within the industry. As a result
cement plant in Ndola.” 1,956,519 metric tons of cement in 2016. Cement of this deficit and growth in the construction activity, the
prices are further expected to drop as more inter- cost of timber has been rising in recent years.
national players show interest in investing in Zambia
and forming joint ventures with local manufacturers.
Buffalo Consortium is one such example of a success-
ful collaboration between Jidong Development Group
Company Ltd China and a local manufacturer for the es- MAIN PLAYERS:
tablishment of a cement plant with a production capacity The Government acts as the principal client to most
of 1.5 million metric tons per annum and would cre- of the National Council of Construction (NCC) registered
ate 500 jobs when completed. Although Zambia has building contractors. Contractors who are not registered
rich resources of iron ore, the local steel industry has, in with the NCC cannot be awarded public contracts. For
recent years, experienced a slowdown in steel produc- these contractors who are registered, the work usually
tion due to the import of cheaper finished products involves major construction projects such as trans-
from abroad. The current Government, to contribute to port infrastructure, hospitals, medical centres, schools,
the country’s industrialisation efforts, has called for locally administrative buildings and various housing develop-
produced steel to be used in all public procurement, ment projects. For example, the Department of Housing
“The large-scale govern- including the building and upgrading of airports. Development, is under the remit of the Ministry of Local
ment construction projects Cement block production is one of the most prominent Government and Housing, is in the process of build-
are generally awarded to building material suppliers within the sector. The required ing 4,000 housing units for public-service workers as a
and performed by foreign- raw materials such as cement, and sand/quarry dust are Public-Private-Partnership project. The Zambian Road
owned construction readily available. Micro- and small-scale businesses tar- Development Agency is promoting a large-scale infra-
companies..” get the low-quality, low-price market segment associated structure project called Link 8000, which in its first phase,
with low- and middle-income residential construction proposed to build 1,500 kilometres of roads within Zam-
while medium-scale cement block producers target the bia. Private clients developing large-scale industrial
quality-conscious market segment like high-income or extraction facilities also finance large-scale projects.
residential construction, commercial construction as The large-scale Government construction projects
well as Government-construction projects. Several hun- are generally awarded to and performed by foreign-
dred micro/small businesses are engaged in supplying owned construction companies. These companies are
sand, metal and crushed stone. The inputs are mined awarded projects because of their ability to submit
locally, collected or bought wholesale from distant loca- comprehensive tenders, their technical capacity, the
tions, transported to urban markets and then sold on. financial instruments that fund start-up works, the acqui-
Around 600 micro, small, and medium businesses sition of large-scale machinery and at times, finance the
supply plantation timber to the building construc- project itself. Some local construction companies are
tion sector. These businesses are primarily located in awarded Government small- and medium- scale con-
the Copperbelt province and are more formally organ- struction, maintenance and renovation projects.
ised with representative associations. The sawmilling For once-off residential construction, most private
businesses are organised into two major associations: clients obtain services from informal/non-registered
Copperbelt Sawmillers and Timber Growers’ Asso- contractors. This type of construction is an owner-
ciation (COSTIGA) and Zambia National Association driven process whereby the client purchases all sup-
of Sawmillers (ZNAS). Every saw-miller must be regis- plies and necessary materials and only the technical
tered with PACRA before they can be issued standing services and labour is contracted. Residential property
trees to harvest. Within the Copperbelt Province, the developers and private commercial developers use well-
timber harvest is managed by the Zambia Forestry established and reputable contractors that can be
and Forest Industries Corporation Limited (ZAFFICO), SMEs. Under this arrangement, the developers con-
which issues permits and regulates quota size and tracts a full service, which includes both labour and sup-
sale price. Legally, timber can only be harvested from ply of the required materials.
 REAL ESTATE INTERVIEW 165

Vast Opportunities Transforming the Market

Shaun Davy, Director, Roma Park

BRIG: How do you see the outlook for Zambia and This is said to have an extraordinary demographic
Government’s efforts to stimulate the economy? dividend. Money certainly nucleates towards the
capital city and subsequently, Lusaka has seen
Shaun Davy: the most growth in commercial property, however
The Zambian economy is intrinsically linked to the the opportunities are abundant in other provinces
global copper price as commodity prices have a as there is a dedicated effort in terms of developing
cyclical nature, which is further demonstrated by road infrastructure and decentralisation.
the increase in prices we are experiencing now, off
extremely low points since 2015. The Zambian econ- BRIG: What are the circumstances that lead to the
omy is very reliant on the copper and the outlook success of the Roma Park project?
of the country is linked to the global-cyclical price
fluctuations. The prospects for economy at this point Shaun Davy:
are very good, again correlating to the copper price, The Zambia Development Agency plays an active
however, a long-term solution needs to be devel- role in facilitating the right contacts here. On the
oped to diversify the economy. The current admin- commercial side, we took the initial risk by pour-
istration is moving in the right direction and needs ing equity into the construction of Roma Park. This
to make tough decisions to ensure that all the commitment showed our commitment and con-
measures that are made to encourage investment vinced a number of residential and commercial inves-
are implemented. tors. We count Madison Group of Companies and
China Civil Engineering Construction Corporation
BRIG: What is the state of the construction and real among our clients. Roma Park is one of Zambia’s
estate sector in Zambia? first mixed-use developments and one of the first
Industrial Parks. Since its inception in 2011, Roma
Shaun Davy: Park has sold over 70% of its residential plots and
The real Estate sector has undergone fundamental the major infrastructure is almost complete.
changes since the advent of the multi-party political
system when the property market was liberalized.
There is a serious housing and real estate short-
age, including the shortage of commercial space
and there is a huge opportunity to feed the appetite
for residential, retail and office space. Zambia as a
country, is growing relatively fast and it has the
land and resources to grow. We are undergoing an
urbanisation process at an accelerated rate. I do
not, however, think that population growth at the
current rate would lead to overpopulation issues.
166 REAL ESTATE INTERVIEW

We intend playing an active role in job creation

and are focusing on harnessing the budding entre-
preneurs of Zambia and on high-end value-added
industries. With our well-considered masterplan,
Roma Park has set a precedent inorganised
growth. The real estate sector will continue to grow
steadily providing that it does not rely on mecha-
nisms such as mortgage. Access to finance is a
challenge and if addressed, would result in exponen-
tial opportunities.

BRIG: Why should the investor choose

Zambia?

Shaun Davy:
Zambia, as with every emerging market, faces
its own problems. The advantages however out-
weigh them. It is a politically and economically
-stable environment centrally located at the heart of
the SADC region. All neighbouring countries are
growing quickly and represent additional opportuni-
ties. Zambia has the potential of developing into an
agricultural powerhouse as agriculture has become
one of the Government’s priority areas along with
the focus on industrialisation and value addi-
tion. There is demand for infrastructural upgrades
throughout Zambia and if the Bank of Zambia de-
velops the right financing mechanisms and policy,
represents a marvelous investment opportunity.
 REAL ESTATE ANALYSIS 167

A Bright Outlook
Demand Driven by Housing Deficit and Increased Industrial Activity

Confidence in the Zambian real estate industry is Several upmarket projects have been launched in 2017
high and is underpinned by healthy economic growth, as part of private investors’ commitment to address the
political stability and a growing population. Supply shortage of high-end residential properties. The Egyptian
is increasing across all sectors: residential, office, investor Hawai Real Estate and Zambia’s Lamasat have
retail, industrial and hospitality. Prices have continued joined forces in a $40m project dubbed Elites to
to rise fuelled by the growing middle-class, strong resi- construct housing units in two of Lusaka’s affluent sub-
dential and retail demand, improved macro-economic urbs. One: 100 units in Lilayi and 50 in Leopards Hill. In-
conditions and the stability of the local currency. There creased infrastructure development, over the last few
were numerous notable real estate transactions in 2015 years, has created access to new suburban areas.
and 2016 with companies such as Mara Delta, SA The land on which Nkwashi, a new satellite town is being
Corporate, Quantum Global, African Life, FQML and constructed could only be accessed via a dirt road, and
Primetime growing their portfolios. Substantial growth two-hour drive from Lusaka. It was originally a ranch and
in real estate investment has been generated by both small-scale coffee farm, but about five years ago the road
local and regional investors. to Nkwashi was developed into a highway that reduced “Zambia is struggling with
travel time from Lusaka to 30 minutes and opened a 1.5 million housing deficit
RESIDENTIAL: up the land’s potential. Nkwashi is the first of its which is expected to rise to
Market activity has slowed across all sections of the kind and one of the largest developments in Africa. 3.3 million units by 2030.”
residential market, but there remains a mismatch be- The development includes provisions for a university,
tween demand and supply at the top end of the Lusaka schools, hospital, public parks, lakes, shopping mall,
rental market due to a shortage of well-designed mod- recreational areas, business park and 9,460 residential
ern properties in the best locations. Self-build projects stands ( a third of which have already been sold).
dominate the housing supply across the market, because A public–private partnership between Zambia Air Force
of the high interest rates. Zambia is struggling with a 1.5 and Sun Share Group has recently resulted in a $1.4m
million housing deficit, which is expected to rise to 3.3 mixed-development project that will comprise a five-star
million units by 2030. The country’s current housing hotel, 3,000 high-class villas and shopping mall. Other
stock is 2.5 million units at a production rate of 73,000 amenities will include a private school, police station,
units per year. In order to address the current housing hospital, children’s play-ground, amongst others.
deficit, 222,000 new housing units need to be developed “The housing deficit presents an opportunity for invest-
annually. The housing challenge in Zambia is most pro- ment and I call upon local and foreign investors to
nounced among low-income groups. Of the 73,000 units exploit this opportunity by developing low, medium and
produced each year, only 40% meet the minimum high-cost houses” said Patrick Chisanga, the former
requirements for health and sanitation in accordance Director General of Zambia, Development Agency.
with the Zambian Public Health Act,” local press “The Government of the Republic of Zambia through
quoted Minister of Transport, Infrastructure Housing Statutory Instrument No. 17 of the ZDA Act, has prior-
and Urban Development, Ronald Chitotela. itized housing unit development in the Economic Zones
168 REAL ESTATE ANALYSIS

RETAIL:
“There are opportunities to anprovided incentives for developers. We aim to es- The retail sector has received special attention, with
develop formal retail cen- tablish and facilitate various partnerships and invest- Zambia having one of the highest formal retail pen-
tres in expanding towns ments to address the current national housing deficit etration rates in Africa. Retail development in Zambia will
around the rest of the coun- and promote real estate and property development”. continue to flourish, with more opportunities evolving in
try.” secondary cities and smaller nodes around Lusaka. Over
OFFICE: 90% of Zambia’s modern shopping mall space is in
Lusaka is a growing commercial hub with office space either Lusaka or the towns of the Copperbelt, with
demand primarily stemming from the financial and com- approximately 300,000 m² of existing retail space in
munication sectors. Cushman & Wakefield under- these locations. As a result, there are opportunities
took a survey in 2014 to determine the operating to develop formal retail centres in expanding towns
environment and the ease and speed of acquiring around the rest of the country. The recently opened
office space in these markets. Zambia, possessing Kafue Shopping Mall, anchored by Pick n Pay, highlights
“Zambia, was placed in the one of the more developed property markets in Africa the demand for niche malls in other towns, from both
top third position among all was placed in the top third position among all emerging shoppers and retailers. Competition for customers and
emerging markets because markets because of the ease of securing property and its retailers is expected to intensify between the shopping
of in the ease of securing political and economic stability. malls in Lusaka, however Zambia’s fast-developing
property.” An oversupply of Grade A space in 2017 has placed property market is proving to be a resilient and risk-toler-
downward pressure on rents, as well as providing more ant long-term investment destination.
choice for tenants. The economy was relatively slug- The commercial real estate in Zambia has recently seen
gish in 2016, largely due to low copper prices, but an uptake of foreign direct investment from South Africa.
a return to better economic growth this year has In 2016, Mara Delta acquired 50% stake in two
resulted in increased demand. The prime location is Zambian shopping malls, Kafubu Mall and Makuba
the emerging Great East Road/Thabo Mbeki Road node Mall in Ndola and Kitwe, respectively. The group’s third
in the immediate vicinity of the East Park Mall and Ar- investment into dominant retail assets in Zambia was
cades Shopping Centre. The prime office space rent Cosmopolitan shopping mall comprising 25,900m² of
currently stands at around $20 per square metre per retail space with 1,300 parking bays and is anchored
month and the yield value is at 10%. Location, parking, by major multinational tenants include Shoprite, Game,
design and specification are now key to the long-term The Foschini Group with dollar-underpinned leases.
returns and success of prime offices as increasing The Manda Hill mall has been acquired by AttAfrica, a
supply in Lusaka is providing more choice for occupi- Sub-Saharan property fund owned by South African
ers. There is high demand for incubator office space investors Hyprop, Attacq and Atterbury.
of 50 to 200 m² from new businesses, start-up companies
and tenants wanting to relocate fromresidential properties
being used as offices.
 REAL ESTATE ANALYSIS 169

INDUSTRIAL:
The logistics and industrial sector is one of the most 7.0% in the last six years and an estimated 275 “the demand for increas-
consistent performing property market sectors in Lusa- bedrooms/million. Hotel values have been growing ingly-sophisticated logis-
ka, with strong demand for warehouse space supported strongly and in Zambia together with other nations tics properties will result in
by the growth of the retail, food and beverage and representing 76% of African countries, the hotel in- a shift away from the exist-
agricultural industries. While warehouses with low vestments have yielded higher than the average prop- ing industrial area to emerg-
quality specifications still attract good demand; how- erty investment, according to The African Hotel Report ing hubs elsewhere around
ever pressure on the transport infrastructure in Lusaka by Hotel Partners Africa (HPA). The supply in Zambia is the city.”
combined with the demand for increasingly-sophisticat- far below the average supply in Southern Africa at 350
ed logistics properties will result in a shift away from the bedrooms/million and a potential to reach the 365 bed-
existing industrial area to emerging hubs elsewhere rooms/million in the mid-term. According to a Price
around the city. The continued expansion of South Afri- Waterhouse Coopers (PWC) research, the hotel industry
can, international and Zambian companies is expected to in Southern Africa is expected to grow at an average rate
generate demand for increasingly sophisticated logistics of 6.8% towards the year 2019.
properties in Lusaka.

HOSPITALITY:
Zambia is the second top destination for hotel de-
velopers in Africa. Zambia, with an average growth of
6.5% per annum in the last six years in the hotel in-
dustry and a supply of 122 branded bedrooms per mil-
lion population, represents the second largest opportunity
in Africa after Seychelles, with an average growth of

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170 REAL ESTATE INTERVIEW

Working Together, Building Synergies

Sydney Popota, Chief Executive Officer, Real Estate Investments Zambia

BRIG: What are the strengths and the challenges of

the construction and real estate sector in Zambia?
How do you evaluate the outlook of the sector?

Sydney Popota:
The slow economic growth in 2015 and 2016 proved reached oversupply in office space. There are many
to be one of the main challenges, although 2017 has structures that have been built but are not occupied. A
shown some promising signs of economic recovery. country with a population growth like Zambia certainly
We are seeing the country’s GDP expected to expand cannot lag behind in residential real estate. We have
by 4.1% this year, up from 3.2% the previous year, a serious shortfall in affordable housing; however we
very slow growth for an emerging market. The cost of should make more effort to define what affordable
funds is very high in Zambia if sourced through local means. Industrial warehousing is another sector with
banks and it therefore puts a lot of strain on the lo- some growth opportunities as Zambia has seen more
cal developers as the financing must be sourced from investment in manufacturing and processing
elsewhere. Recently, more options have become operations.
available to finance property development through
cheaper funds from abroad, e.g. South Africa and the
Middle East among others. Strategic partnerships and Public-Private Partner-
ships (PPPs) will be a game changer inthe Construc-
Zambia is an attractive emerging market for the Con- tion and real estate sector. The need for Government
struction and real estate sector as population growth offices is growing, so are the opportunities in con-
and urbanisation has remained high. The current structing schools, hospitals and student accommoda-
Government has enabled access to other less urban- tion inother provinces. The investor should be crea-
ised provinces and districts through dedicated road tive and engage Government or parastatals to build a
infrastructure development so we see countless op- long-term affiliation.
portunities in development away from the traditional
Lusaka and Copperbelt areas. Potential is growing in
other provincial centres and districts.
At REIZ we intend to expand our business in the next
Over the next 18 months, the residential subsector will five years to double the gross lettable area (GLA) of
receive most attention from investors. With regards to our business by reaching 100,000 m² GLA by 2021
commercial real estate, Lusaka particularly is nearing and diversify both the property sectors and geograph-
an oversupply in the retail subsector and has already ical reach on our portfolio.
 REAL ESTATE INTERVIEW 171

BRIG: What can be done to stimulate the synergy be- BRIG: What regulatory measures are being taken to
tween the Government and the private sector in the ensure the quality of property development?
Real Estate sector?

Sydney Popota: Sydney Popota:

I think that, because of the various commitments of The regulatory measures are satisfactory. A con-
the Government, it should work more on building struction company needs multiple clearances before
synergy with the private sector. As the Government commencing works, for example, Zambia Environ-
is already committed to supporting the economy with ment Management Agency (ZEMA) issues permits to
sound economic policies, to add the cost of infrastruc- regulate the environmental impact, and all construc-
ture would be too much to ask for. First, more PPPs tion companies must be registered with the National
must be encouraged to enhance the capacity. The Council for Construction (NCC). However, enforce-
private sector should work on the infrastructure and ment and monitoring to ensure that all players follow
offer it to the government as a service. the issued guidelines is a challenge.
Also, the Government must be more approachable
and more accommodative. To plan ahead, the private
sector players should know what the long-term policy
of the Government is. To achieve that, more consulta-
tion needs to take place between the two. The more
we work together to develop long-term policy, the
more supportive the private sector will be.
172

Kupeza chamulumbi apezela vali nangimbu. (Luvale)

When a simpleton finds something, he finds it for those with
axes.
A man without basic tools or capital will never succeed in life.
Work hard to ensure others do not have your precious find
exploited by others
ICT
SMART Zambia to address limited connectivity and shortage of ICT talent

The cost of data services a limiting factor for growth

Growing demand for ICT equipment and training

The Government to set legal framework for provision of e-services

174 ICT ANALYSIS

Connecting People, Collecting Profit

The Role ICTs Play in Uplifting Zambia’s Economy
BACKGROUND AND CURRENT SITUATION: use of e-government services. The SMART Zam-
The Government’s Seventh National Develop- bia Institute (SZI), a division under the Office of
ment Plan 2017-2021 (7NDP) has identified In- the President, is the implementing agent. The first
formation and Communication Technology (ICT) phase of SMART Zambia was the established of
as a catalyst for socio-economic development as the National Data Centre (ZNDC) that was built to
it encourages competitiveness and is an enabler a Tier III standard, which is now complete. This
for good governance. This is in line with Zambia’s facility is able to store information safely for both
Vision 2030, which is to become an “information Government and private institutions. The ZNDC is
and knowledge-based society by 2030”. This is comprised of three data centres across two cities,
to be achieved through increased connectivity to which helps to ensure security and continuity of
fibre optic and similar high-capacity transmission Government services and data. The facility also
networks, increased access and use of mobile has a Huawei cloud solution with services such
phones, and increased access to ICT services as Government and enterprise cloud hosting, and
such as the internet. The Zambia Information and Huawei energy solutions to guarantee the safe op-
Communications Technology Authority (ZICTA) is eration of devices in the ZNBC equipment rooms.
the ICT regulatory body responsible for regulat- The second phase is now being undertaken,
ing the ICT Sector in Zambia. It falls under the which is to build a national broadband network
Ministry of Transport, Works, Supply and Commu- and e-government platforms that will benefit 17
nications. Its mandate is derived from the Postal cities across Zambia. This will be achieved by
Services Act No. 22 of 2009, the Electronic Com- laying 9,050 km of fibre optic cable across ten
munications and Transactions Act No. 21, and the provinces; connect 10,000 businesses and public-
Information and Communication Technology (ICT) sector organizations, and 200,000 thousand ur-
Act No. 15 of 2009. In 2001, the Ministry issued ban households to the ZNDC. In addition, the first
a Statutory Instrument that made SIM card reg- phase of the communication towers project has
istration mandatory; by the end of January 2004, been completed with 204 more towers already
ZICTA disconnected all unregistered SIM cards. built; the second phase will see 1009 more be-
“The ICT sector continues The Government wants it mandatory for all ICT ing built over the next three years in mostly un-
to expand across the dif- service providers to register with the ICT Society derserved and unserved areas, which will help the
ferent segments of the sec- of Zambia. Such a registry would showcase which country reach 100% network coverage. Zambia
tor.” service providers are available for a specific task, aims to stimulate informatization by the promotion
have the necessary skills and their capability. of and access to SMART national government ap-
The Zambian Government is committed to the en- plications to the general public. An effect of this
hancement of a SMART Zambia. This project aims would be the stimulation of e-commerce in the
to transform the country through ICT development country too. The positive effects of implemented
and enhance the successful implementation and e-government platforms are already evident.
 ICT ANALYSIS 175

CHALLENGES:
There are three main challenges in accessing and tions networks as well as access to devices. Social
utilising ICT in the country. Firstly, there are weak and economic benefits, and better service delivery
supportive legal and institutional frameworks for would be realised by the improved flow of infor-
the development and utilisation of ICT. Secondly, mation within and among government institutions,
there is poor connectivity due to inadequate and enterprises and citizens. Programmes to achieve
fragmented ICT infrastructure in both the public this are through common ICT infrastructure devel-
and private sectors. Lastly, there are inadequate opment, the establishment of an ICT innovation
human resources, especially in the public sector, park and broadband infrastructure expansion.
in the field of computing and information technol- The third strategy is the provision of electronic
ogy. Beyond this, the sector faces challenges that services. This entails the transformation of public
are more specific. ICT services can be relatively service delivery. This a move away from traditional
more expensive than other countries. This is due face-to-face interaction to online channels, which
to Zambia being a landlocked country and having would allow citizens and business entities to ac-
reliable fibre-optic connectivity requires connect- cess services remotely and at their convenience.
ing to the submarine cables and running fibre-op- Programmes to facilitate this include the deploy-
tic cables through other countries to reach ment of electronic services, up-scaling of ICT skills
Zambia. This has required a large capital outlay, in public and private institutions, and mainstream-
as does the provision of data services to unserved ing of ICT in the Zambian schools’ curricula.
communities across the country, especially in ru-
ral areas. GROWTH:
The cost of data services is expensive and could In spite of the challenges previously mentioned, “The cost of data services
be a limiting factor for the growth of the ICT sec- the ICT sector continues to expand across the dif- is expensive and could
tor. Since most ICT equipment and software is im- ferent segments of the sector. There is the under- be a limiting factor for the
ported, foreign exchange rates can increase the standing that the International-standard ICT infra- growth of the ICT sector.”
costs of acquiring equipment. The occurrence of structure is imperative for the success of the sector
infrastructure vandalism results in disruptions of and other sectors. With the President backing ICT
services during repairs as well as incurring high as a driver of development and, with the Govern-
maintenance costs, which are passed on to the ment’s plans of digitisation and roll out of e-plat-
consumer. Zambia’s current power shortage situ- forms across the country’s different Ministries, the
ation requires backup power supplies for con- ICT sector’s businesses will benefit greatly. The
tinuous service and protection of equipment. The Government is encouraging SMEs to embrace
Government has insufficient funds to provide ap- the use of technology and integrate ICTs into their
propriate ICT education at primary school level; operations. This market segment represents the
this problem is greater in rural areas. In addition, majority of the economically-active population.
hacking and cyber-related crime is a worldwide The ICT sector is a relatively young industry,
threat and Zambia is not exempt from this. which provides good prospects for growth. Large
portions of businesses in Zambia are not yet com-
ICT DEVELOPMENT AGENDA: puterised, but this is set to change. Accordingly,
In terms of ICT, the 7NDP and the SMART Zam- the increasing demand for ICT equipment offers
bia Master Plan aim to mitigate the challenges great investment opportunities. Across the sector,
described above. There are three strategies mergers and partnerships are common as existing
along with their individual programmes. The first and new companies expand their operations. In
is through strengthening the legal framework re- addition, due to Zambia’s strategic location in the
lating to ICT. The Government aims to implement region, many international companies establish
appropriate laws, policies and regulations that themselves in the country and thereafter expand
support the provision of electronic services. This into the less-stable neighbouring countries. Differ-
will be achieved through the review of policy, le- ent segments of the sector, as well as their growth
gal, institutional and regulatory frameworks and and investment potential, are described below.
enhancement thereof. This is in aid of stimulating
the private sector’s and citizens’ confidence and CONNECTIVITY AND INFRASTRUCTURE DE-
participation in the sector. VELOPMENT:
The second strategy is to improve ICT infrastruc- There were over 12 million mobile telephone sub-
ture for enhanced service delivery. This requires scribers in 2016, up from 11.3 million in 2006,
investment in, and upgrading of, telecommunica- which is an increase of 5.75%. These figures
 176 ICT ANALYSIS

represent a penetration rate of around 75%. Ac- three to five years and service providers continu-
cess to the internet and subsequent use thereof ously roll out new products to increase speed and
has risen steadily. This is due to an increase in lower costs to stay ahead of competitors. Major
mobile cellular coverage and mobile networks be- towns and cities are well connected. Rural areas
ing upgraded, which continues with the rollout of are generally sparsely populated and have poor
broadband internet services. The internet’s pene- connectivity; this is set to change over the next
tration rate has increased from 2% in 2004 to over three years as more communication towers come
“Zambia is experiencing 15% in 2013. In 2013, fixed broadband and mobile online. Both the public and private sectors have
diverse ICT infrastructure broadband subscriptions were very rare, with low invested heavily in building data infrastructure
development and increases penetration rates of 0.1% and 0.7% respectively. across the country. The penetration rate of the
in the number of service The penetration rate in rural areas is much lower country’s fixed-line telephony is very low and is
providers.” due to lack of access to electricity. being developed further by replacing copper ca-
Zambia Telecommunications Company Ltd (Zam- bles with fibre optics; the necessary skills and
tel), the Zambia Electricity Supply Corporation Ltd. equipment are needed in the assistance of this
(ZESCO) and the Copperbelt Energy Corporation expansion. Zamtel, who own the majority of the
(CEC) supply the national fibre backbone with infrastructure, has seen their network of suppli-
Zamtel operating the fibre-optic connection to two ers growing as well as requests for Public-Private
international submarine cables, namely the West Partnerships, which the company welcomes, es-
Africa Cable System (WACS) and South Atlantic pecially with regards to capacity expansion.
3 (Sat-3). Zamtel leases MTN and Airtel access
to their undersea cables and other infrastructure, THE ICT INDUSTRY:
although MTN connects to the Eastern African Most of the country’s business activity is concen-
Submarine Cable System (EASCS). According to trated in the cities and, as such, has the best ICT
the UN’s International Telecommunication Union, infrastructure. Although the industry is young,
the gateway to international internet in Zambia businesses in the country offer the full spectrum of
is fully liberalised and competitive. Three mobile ICT-related services and products, and they offer
phone operators service the 12 million-odd phone their services countrywide. These businesses are
subscribers; namely MTN, Airtel and Zamtel with a both local and multinational companies. Zambia
market share of 48%, 37% and 15% respectively. is experiencing diverse ICT infrastructure devel-
The Government has approved the introduction opment and increases in the number of service
of a converged licensing framework; which will providers, which is enhancing connectivity and
open the telecommunications market beyond the reducing costs due to an increase in competition.
current three mobile operators. Multiple internet- In terms of importing equipment, the Government
service providers (ISPs) supply both wireless and has been proactive in stimulating the sector by re-
Fibre to the Premises (FttP); services and speed ducing import duties in order to reduce the costs.
of the different ISPs vary, and one should investi- The demand for equipment is increasing with the
gate which provider would offer the best service. informatisation of the country.
The country upgrades its infrastructure every

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 ICT ANALYSIS 177

TRAINING:
With the country’s increasing levels of education ing energy inputs and this market is growing as
and the increase in computerisation within the businesses increase their use of ICT. With the
private and public sectors, there is high growth increase in use of technologies and the internet,
potential within this sub-sector for the provision customers are needing greater cyber-security
of proficient IT skills. There are public and private systems. There is a major need for the develop-
institutions that fill this need and conduct the nec- ment of e-security and education about e-security;
essary training; these institutions are continuing to unsecure e-mail servers are often used and this is “SMART Zambia aims
expand as the adoption of ICT increases. A spinoff a threat to protecting classified information. to transform the country
of greater ICT adoption is the enhanced ability of Business Process Outsourcing (BPO) services, through ICT development.”
the population to access online learning. such as call centres and customer service in gen-
eral, is an area that Zambia has started to take se-
OTHER SERVICES: riously and seems likely to continue seeing posi-
Cloud computing has taken off and, its growth tive growth. To Zambia’s advantage, call centres
is set to increase further and it has been recog- can serve people anywhere in the world and, the
nised as one of the fastest growing service seg- Zambian peoples accent is fairly neutral and mini-
ments of the sector. Cloud computing services mal training is required for people to work in call
will help both the public and private sector’s ICT centres. This is a fairly new service in the country
security. This type of data management is easier and allows customers, in conjunction with mobile
and more cost-effective for smaller businesses as payment solutions, to do a range of activities over
access to the cloud’s services are considerably the phone. Mobile payment solutions are on the
cheaper than investing in servers and software on rise (mobile money, e-banking, e-vouchers) and
their premises; although provision of servers and the expansion of this service is inevitable; this is
software is still a need. In the foreseeable future, whereby people can transfer money through their
centralised databases will be developed and data mobile phones, as is the ability to source market
storage will migrate to these data centres. information. Overall, the sector is growing in all
Due to the current power shortage situation, directions and, offers an exciting and profitable
backup power supplies are essential in stabilis- investment opportunity.
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 ICT INTERVIEW 179

Great Opportunities, New Beginnings

Sydney Mupeta, Managing Director, Zamtel

BRIG: There is a strong focus on stimulating

Zambia’s economy through the diversification of
its main sectors and the deepening and support-
ing of Zambia’s industrialisation capacity. How do
you evaluate the outlook for Zambia and Govern-
ment’s efforts to stimulate the economy?

Sydney Mupeta:
As things stand, there has been significant effort tomation is still very low.
from the Government and its institutions to build In the next few years, Zambia should see the data
and improve the ICT infrastructure in Zambia. The storage migrating to data centres and Govern-
President has clearly expressed that part of his ment institutions offering more e-services online
vision is to establish a Smart Zambia. Information and developing centralised databases. An impor-
technology is key to this development and it has tant part of the ICT revolution in Zambia is for the
to be available in the hands of the right people. No ordinary citizen to benefit from ICT services.
sector of the economy can function optimally in
the absence of information technology. BRIG: Can you give us an overview of Zamtel and
From the perspective of Zamtel, ICT infrastructure its activities and what role Zamtel plays in devel-
plays a key role in the development of the econ- oping Zambia’s economy?
omy as no sector can develop to its full potential
without the use of ICT. As an example, information Sydney Mupeta:
technology has the capacity to enhance such criti- Zamtel currently is on course to expand cover-
cal sectors as agriculture with the right resources age of the 2G and 3G networks and plans are ad-
available to the farmers and education with infor- vanced to develop a 4G network. This will entail
mation sharing available between learning institu- rolling out access to our services in the rural areas
tions and providing access to e-learning facilities. of Zambia which is an important part of developing
One of the first phases towards establishing a the 10 provinces. After the completion of this pro-
Smart Zambia is invested in building data centres. ject, Zamtel will have the widest coverage in the
Here, our e-security is still in need of much de- country. In addition to that, we are also growing
velopment and one can see many institutions use our fixed network, which has been quite stagnant
unsecure email servers, which pose a challenge for some time. We are currently trying to replace
in guarding classified information. The level of au- our copper cables with fibre and migrate to a fixed
180 ICT INTERVIEW

BRIG: What are the figures and the milestones

that best portray Zamtel’s success and what pro-
jects are currently in the pipeline?

Sydney Mupeta:
wireless network, which we already see growing Our next milestone is to reach 2.5 million cus-
in the Copperbelt Province and for various Gov- tomers by the end of 2017 and start generating
ernment projects. Zamtel sees a lot of potential in positive cashflows. After quite a slump in our re-
offering to fixed wireless service to the corporate sults, we have finally started seeing rapid positive
customers, starting from August. changes due to new management policies. Our
Zamtel has grown tremendously over the past subscriber base has grown with almost a million
one year. Our network has acquired almost one new customers now on board and the company’s
million new customers, bringing our active base revenues have increased with it. Zamtel is also
a over two million customers as at August, 2017. planning the expansion of the fixed network and
This growth extends to both individual and corpo- our target is reached 250,000 customers by mid-
rate clients and our focus is to rapidly develop our 2018. That allows us to set bigger milestones and
infrastructure in order to support our growth ambi- implement our five-year plan. By the end of 2018
tions. we expect to exceed 2.7 million customers and
our targets are aggressive and we are bullish in
BRIG: How can the potential investor partner with implementing them.
Zamtel? Our customers switch from their previous mobile
operators because of the products we offer, our
Sydney Mupeta: data packages for mobile are very attractively
Zamtel is prepared to work with any local or for- priced at K49 per 1 GB and have caused custom-
eign investors in a number of ways. We have ers to migrate to Zamtel.
seen our supplier network increasing and there
are many requests for Public Private Partnerships BRIG: Do you have a final message to the poten-
(PPPs). As a company, Zamtel is still growing and tial investor interested in Zambia?
learning about the tremendous potential within the
ICT sector in Zambia so we want our collabora- Sydney Mupeta:
tors to grow with us. We always look at how much Zambia has the greatest untapped potential in
of added value will be created for the company the region and I feel that Zambia’s growth has not
and for Zambia. Our biggest challenge and also started yet. I see the Zambian market develop into
an opportunity is in capacity expansion and we a regional hub with strong links with neighboring
welcome companies willing to partner with us in countries. Upgraded infrastructure will turn Zam-
that space. bia not only into a transit point but improve our
potential in exporting our goods and services.
BRIG: How does increased access to IT and e-
services help develop markets in Zambia?

Sydney Mupeta:
Zambia should work on providing access to ICT
services outside Lusaka and the bigger cities. Im-
mediate access to information can help develop
businesses add value to their services and play
a key role in wealth creation in the rural parts of
the country.
 ICT INTERVIEW 181

Preparing for a Connected Future

Andrew Kapula, Managing Director, CEC Liquid Telecom

BRIG: What are the three signs of optimism that

comes to mind regarding the future of ICT in Zam-
bia and which areas do you see developing?

Andrew Kapula:
The Zambian Government is stimulating the coun- the policy framework outlined in the ICT Master
try’s economy through diversification efforts to Plan of Zambia, published in June 2010. The
other sectors such as agriculture, transport, and Centre of Excellence for ICT will play an important
ICT. Compared with the other countries in the re- role in developing a knowledge-based society in
gion, Zambia still has a relatively low data-pene- Zambia whose young population is the largest us-
tration rate and thus represents a huge business ers of technology. The Cabinet has also approved
opportunity to develop a network that enables ac- the introduction of a converged licensing frame-
cess to data across the country. The Government work in ICT which will open the telecommunica-
of Zambia has also launched the SMART Zambia tions market beyond the current three mobile op-
project to advance the national informatisation erators. Zambia’s investment climate is currently
program for eGovernment, eCommerce and IT conducive for the sector. The government is also
talent. The ICT Centre of Excellence was estab- encouraging SMEs to embrace the use of technol-
lished as part of SMART Zambia with the mandate ogy and incorporate the ICTs in their operations.
of increasing skilled human capital in ICTs. Infor- SMEs represent the majority of the economically
mation and Communication Technology is one of -active population and providing them with ad-
the focus areas of the Government of Zambia with equate services would result in assured growth.
182 ICT INTERVIEW

BRIG: What is the current state of the ICT sector BRIG: How can government and the private sec-
in Zambia and what are the main challenges and tor work together to make Zambia more competi-
opportunities? tive globally?

Andrew Kapula: Andrew Kapula:

Zambia’s ICT competitiveness has help the coun- Both the Government and the private sector of
try grow at a rapid rate despite having a number Zambia should extend more effort in raising aware-
of challenges. Vandalism, for example, has made ness on the numerous opportunities our country
the country suffer high maintenance costs and offers to foreign investors. Zambia is strategically
major disruptions in service when repairs are tak- located and has a conducive business environ-
ing place. The cost of unrolling fibre optic infra- ment that investors look for in a country. Few
structure is extremely high, especially to cover countries are as peaceful and investor friendly as
the entire landmass of Zambia and the industry is Zambia. Being a low-risk business environment,
heavily taxed. the country has yet to maximize on the potential
The fixed line telephony penetration rate is still ex- to attract investors. The Government has priori-
tremely low, but has a huge opportunity for growth. tised infrastructure development which will further
Zambia upgrades its ICT infrastructure every cement links to the SADC and COMESA markets
three to five years and introduces new products, contributing to the establishment of a conducive
such as fibre-optic cable connection, that now environment for business.
allows fibre-optic communication at homes and
businesses at superfast speed with unlimited
data usage. As major player in the ICT industry,
CEC Liquid Telecommunication in particular, has
launched a 4G LTE service and is unveiling it in
different parts of the country with major invest-
ments planned over the next two years. At CEC
Liquid we understand that international-standard
ICT infrastructure is key to investment opportuni-
ties and ensuing businesses and their operations.
Zambia is seeing the development of diverse ICT
infrastructure that is enhancing the interconnectiv-
ity. The number of service providers is increasing
and in turn, driving down the prices in the com-
munications sector because of increased compe-
tition.
 ICT ARTICLE 183

Can Zambian Companies Survive the Digital Revolution?

A New Era Beckons

Words by Lishala Situmbeko

To be sure, anything that goes up must come community marketplace where users list accom-
down. In business, then, the ensuing question I modations or book accommodations; essentially
guess becomes one of how long can a company connecting both demand and supply. Airbnb
stay up and continue as a going concern. How boasts a reach of at least 65,000 cities in at least
long can an enterprise stay relevant to custom- 191 countries where different kinds of accommo-
ers? This question is especially relevant as we ap- dations, including single rooms and even castles,
proach the 2020s and as the traditional definitions can be found. The business model rests on ser-
of markets, products and consumers undergo vice charges Airbnb levies to those wishing to list
massive changes. In a 2016 report, Innosight pub- accommodations and those wishing to book. The
lished research results on companies in the S&P different levies go to facilitating customer pay-
500 index with the following prediction: “Half of ments and actual running of the site respectively.
S&P 500 companies are expected to be replaced Clearly then, it is quite difficult for a single hotel
over the next 10 years”. According to Innosight, chain to compete on accommodation variety and
companies in the 1960s used to last 33 years on cost. Spare rooms in people’s homes and other
average on the index, dropping to an average of available properties have now become more eas-
20 years in 1990 and projected to average 14 ily rentable. It has also become easier for people
years by 2026. At the global level, this prediction is seeking to rent to search and find appropriate ac-
startling and brings to light the intensity of compe- commodation across the world. While the com-
tition and the challenge to stay afloat in a complex petition is not directly with hotels and other more
environment. established facilities, the total supply and variety
In this article, I share some of the ideas that are of rentable accommodation is bolstered - it’s not
responsible for major corporations’ around the very easy to find a castle to rent outside a plat-
world, reducing lifespan and what Zambian com- form like Airbnb. Importantly, the increased supply
panies and other investors in Zambia can learn in of accommodation also results in increased price
order to remain in business. Clearly understand- pressure in this market.
ing the forces at play and some of the measures Moving on to Uber, we see a similar pattern where
relevant for remaining a going concern are critical those seeking a ride and those willing to provide
to maintaining and accelerating Zambia’s eco- rides come together through the Uber platform
nomic growth to double digit territory, growing the available through an app. Unlike traditional taxi
tax base and expanding employment opportuni- companies, Uber technology provides essentially
ties for a growing middle class. three forms of infrastructure: secure payments in-
frastructure to both customers and taxi operators,
HOW THE NEWBIES’ PLAY: real time location services for both customer and
Let us take the markets for overnight stays and the car coming to pick you up, and lastly identity
the taxi market. The overnight stays market is infrastructure that screens unwanted customers.
commonly played by hotels and other smaller bed Both taxis and customers find value in these ser-
and breakfasts around the world. vices without having to travel to a taxi rank. Many
Enter Airbnb. Airbnb describe themselves as a international travellers wishing to flag down a taxi
184 ICT ARTICLE

in Manhattan, New York (the Yellow Cabs), will strong market share. What Apple created with the
bear testimony to this nightmare at certain times iPhone, and the accompanying operating system,
of day. Uber has also had the critical benefit of was not only a phone to compete in the mobile
having lower prices. hand-set industry, but a platform where app devel-
opers interacted with app users. Apple therefore
Two critical points to note with Airbnb and Uber is created an ecosystem housing both the demand
that none of them own the properties customers for, and supply of, apps. One might argue that the
rent and the taxis on offer respectively. As platform survival of other hand-set manufacturers would
operators, Airbnb and Uber extract the network have been doubted had it not been for the intro-
benefits that arise from the platforms they oper- duction of Android operating system.
ate. A little more on this point after we consider
the impotence of a traditional strategy approach. So what does this all mean for established and
upcoming businesses in Zambia?
TRADITIONAL STRATEGY WON’T HELP:
In a 2016 Harvard Business Review article, Al- TO BECOME A PLATFORM OR NOT:
styne and his colleagues share research results To start with, we need to recognise some of the in-
that indicate that: “When a platform enters a pipe- dustries that are clearly in the line of fire from digi-
line firm’s market, the platform almost always tal enterprises. The following are some of the key
wins”. They characterise a pipeline business as industries that are facing platform threats: mobile
the traditional buy material, make and sell busi- telecommunications, financial services, retailing,
ness. What does a traditional business do when tertiary education, hospitality, newspaper media
faced with stiff competition? The received wisdom and transport (taxis). To understand this threat,
over the years has been well summarised by strat- the initial step is to identify the multiple sides of
egy gurus such as Rita McGrath in her book, The consumers and suppliers that make things hap-
End of Competitive Advantage, in reference to the pen in these industries. Below we discuss some
strategy framework inspired by Harvard Professor examples.
Michael Porter of the Five Forces ,fame, where the In mobile telephony, clearly those that want to
concept of the value chain enabled the articulation make calls interact with those that want to be able
of strategic responses to be employed by a firm in to receive calls. In that sense, the telecoms are
the face of competition. This framework posits that already a platform from voice-call market perspec-
a firm assessing its competitive position and over- tive. It is no argument to state that platforms such
all sustainability of its industry takes into account as WhatsApp owned by Facebook have disrupted
the competition provided by new entrants into its the paid voice call market domestically thus shift-
industry, the bargaining strength of suppliers and ing the play to data bundles for telecom incum-
consumers, the threat of substitute products and bents.
services, and the sheer intensity of rivalries. The Most financial services, such as banking, have
applicability of this traditional framework however multiple sides: suppliers of deposits and users of
assumes the luxury of a neatly defined industry. deposits (who in this case are banks through reg-
With digital ecosystems, the existing industry may ulation) are one market. Suppliers of credit (most-
remain unchanged whilst another completely dif- ly banks) and users of credit (firms and individual
ferent and superior industry emerges. consumers). Platform play in the banking industry
Competition amongst mobile hand-set manufac- would require the introduction of platforms in the
turers perhaps exemplifies this point. When the various markets banks play. These areas include
iPhone was introduced in 2007, other competi- lending, trading and payments or transfers. Each
tors such as Nokia and Motorola where enjoying of these areas has been penetrated to various de-
 ICT ARTICLE 185

grees with the emergence of peer-to-peer lending pumps. With these changes, it is likely that con-
platforms (e.g. Lending Club), online equity and sumers will be able to have their hand-sets com-
currency-trading platforms and the introduction of municate with the pump to discharge a specific
crypto-currencies as a means of payment. amount of fuel for a given value, even without the
A key market which has witnessed the most com- assistance of a fuel attendant. With forward look-
petition and disruption particularly in Africa, the ing industry regulators and safety enhancements
money transfer market for sending and receiving at fuel stations to prevent ignition from hand-set
money. This seems to be the most contested with devices, this reality is likely to come to pass soon-
various players extending digital capabilities to er than later. Therefore, remaining competitive will
stay relevant. A mix of regulations and physical in- call for forward-looking thinking to build platforms
frastructure change can easily speed up full-scale around the traditional retail fuel business and oth-
developments in this space and totally redefine er retail businesses. Already, supermarkets have
banking as we know it today. Therefore, players embraced platforms in the western world and are
should totally embrace the benefits of platforms performing successfully.
and keep extending various sub-markets to take
advantage of platform benefits.
In the retail space, let us consider the market for Think Global Act Local is the New Normal For
fuel. Currently, all oil marketing companies rely economic survival, it is imperative that all busi-
on corporate relationships, physical infrastruc- ness look to digital solutions in order to survive
ture constructed at client premises and product competition that will come from pure platforms
and service bundling to compete in the wholesale and other competitors that will be competing on
market. The retail market is likely to see some dis- the basis of hybrid systems combine traditional
ruption in the near future. With smart phone prices and platform businesses. It is not a question of
coming down over time and payments systems whether to incorporate platform developments or
infrastructure costs coming down, we are likely to not. It will be a question of when and which par-
see a situation where mobile apps are developed ticular technologies will suit particular businesses
that allow consumers to plan their fuel purchases and industries. Also taking into account the abil-
from multiple filling stations run by competing oil ity to better understand customer, using artificial
marketing companies. Consumers will be able to intelligence technologies, businesses will be re-
redeem predetermined value set on the app to quired to evolve their strategy and incorporate the
purchase specific fuel quantities by simply tapping strong advantages that digital technologies have
on QR codes or other sensors embedded on fuel brought to bear.
186

Akafupa utemenwe, e kakusha imicene. (Bemba)

A small bone you like, may leave you toothless.
Excessive indulgence in a thing is harmful.
HEALTH
Government remains the biggest health provider

Health system increasingly more decentralised

NCDs burden a growing concern

Steady decline in communicable diseases

Efforts to address undersupply of health professionals

188 HEALTH ANALYSIS

Aiming for a Healthier Zambia

Working to Provide More Efficient Healthcare through
Increased Coverage and Service Delivery

The health services in Zambia are provided by four The burden of NCDs in Zambia is increasing with
main players, namely the Government, faith-based significant consequences on morbidity and mortal-
(not-for-profit) providers, the mines, and private ity levels. Prevention and control of the major com-
(for-profit) providers. The public sector is the big- municable diseases in Zambia – chronic respiratory
gest healthprovider; 90% of patients seek care diseases, sickle cell anaemia, cancer, CVDs – has
in facilities owned and run by the Government. received little attention compared with the major
The national level is responsible for overall coordi- communicable diseases. Road accidents are the
nation and management, policy formulation, stra- third leading cause of death after malaria and HIV /
tegic planning, and resource mobilisation. Histori- AIDS.
cal under-investment in public health care services
and a rapidly rising population spread over a vast FINANCING:
geographic area have affected service provision Public health financing in Zambia has been affected
and quality in Zambia, with many rural areas being by an economic slowdown in recent years as Gov-
“90% of patients seek care severely underserved. The sector faces a range of ernment expenditure stagnated with the decline in
in facilities owned and run challenges, though investment programmes from GDP growth. In 2014, according to the WHO Health
by the Government.” both the public and private sectors are addressing Expenditure Database, total health expenditure
many of them. represented 5% of Zambia’s GDP. This is lower
than the average of 5.9% for other lower-middle in-
FACTS AND FIGURES: come countries and well below the global average
As with several emerging markets in the Sub-Sa- of 6.8%.
haran region, Zambia has seen positive overall Zambia’s government expenditure on health care
developments in health indicators in recent years. stood at about 11.3% of total Government expendi-
Despite making tremendous progress in selected ture in 2014, slightly higher than the average of
indicators, the country still experiences a high dis- 10.0% for other lower-middle-income countries. It
ease burden. According to the World Bank Group did not, however, meet the 15% target set by the
statistics, in 2015, communicable diseases still Organisation for African Unity’s 2001 Abuja Decla-
account for 60.7% of deaths, compared to 29.4% ration, but It is almost on par with the global average
attributed to non-communicable diseases (NCDs) of 11.8%.
and 9.9% to injuries. Zambia depends extensively on donor support for
The occurrence of communicable diseases has health provision and services. Some 38% of the to-
continued to decline in the last five years. The Min- tal health sector expenditure in 2014 was funded by
istry of Health had prioritized the fight against TB, external sources.
malaria and HIV/AIDS with improved access to ba-
sic health care in rural areas and the introduction of
better monitoring mechanisms.
 HEALTH ANALYSIS 189

IMPROVING ACCESS:
Comparisons with regional neighbours highlight a rural areas and 34.8% in urban areas. The Ministry
need for increased investment in health care to im- of Health has made notable progress in ensuring the
prove access and quality. According to the UN Pop- availability of medicines and medicinal supplies for
ulation Division, Zambia ranks slightly higher than the management and control of NCDs by including
most of its neighbours, with the number of deaths NCD medicines on the essential medicine list for
for children under the age of five at 49.4 per 1,000 Zambia.
births. Life expectancy is 64.7 years for women and Significant strides have been made by establish- “The Ministry of Health has
59 for men, compared to 59.4 and 55.7 in Mozam- ing and expanding the Cancer Diseases Hospital, made notable progress in
bique and 66.2 and 59.3 in South Africa. and establishing cervical cancer screening pro- ensuring the availability of
While Zambia has a few international-standard grammes. The Ministry of Health has also finalized medicines and medicinal
medical facilities, limited Government resources the mental health and tobacco products control bill, supplies for the manage-
and low overall per capita spending restrict provi- initiated the Human Papilloma Virus vaccination ment and control of NCDs”
sion coverage and quality. As a percentage of over- programme and commissioned the cardiac cath-
all government expenditure, health care has aver- eterisation laboratory.
aged around 9% for the past few years. Per capita Despite these achievements, Zambia is still facing
spending on health care reached $195 in 2014, well several challenges in responding more effectively
behind South Africa ($1,148) and Namibia ($869), to NCDs. Low levels of public awareness and the in-
but above Malawi ($93) and Mozambique ($79). adequate human, financial and material resources
Zambians contributed 67.2% of health care spend- for NCD prevention and control, coupled with inad-
ing out-of-pocket, further demonstrating the under- equate NCD diagnostic capacity, will prove to be
resourcing of public services. a burden until a more coordinated multidisciplinary
The Zambian health system has been decentral- approach is developed and the policy framework
ised to district and hospital levels where local gov- clearly formulated by the Government.
ernment authorities responsible for delivering pub-
lic services in local health. COMMUNICABLE DISEASES:
In the past decade Zambia has seen positive devel-
INFRASTRUCTURE DEVELOPMENT: opments in its efforts to combat the three main infec-
Positive strides have been made in infrastructure tious diseases– malaria, HIV/AIDS, and TB.
upgrade and construction. As of December 2016,
275 out of 650 health posts were built and are now Malaria:
operational. Furthermore, 36 district hospitals were The Government has made eliminating malaria by
under construction, while Matero and Chilenje 2021 one of the highest national health priorities.
Health Facilities have been upgraded. The Univer- Malaria is still among the top ten causes of morbid-
sity Teaching Hospital (UTH) and provincial hospi- ity and is the most widespread cause of mortality in
tals were undergoing modernisation with the instal- health institutions however, statistics show notable
lation of computerised tomography (CT) scans, and improvements in the reduction of malaria admis-
mammography equipment. Intensive care units sions and deaths. The number of malaria incidents
(ICUs) in some selected general hospitals had also has notably reduced from 382.2 per 1,000 popula-
been installed. tion in 2000 to 173.7 in 2015.
The construction of the National Health Training The transmission is prevented through two main pri-
Institute with a 3,000 student capacity, is nearing mary vector control methods: the use of long-lasting
completion, with 70% of construction work done. insecticide-treated nets and indoor residual spray-
Construction of a 240 in-patient bed capacity at the ing complemented by larval source management.
Cancer Disease Hospital (CDH) was completed Progress has been made to increase the coverage
and is now operational. of primary malaria interventions. Ownership of at
least one insecticide-treated net per household in-
NON-COMMUNICABLE DISEASES: creased from 68% in 2012 to 77% in 2015. The nets
The burden of NCDs in Zambia is increasing, with are, however, used for fishing rather than protection
significant consequences for morbidity and mortal- at night. Access to malaria diagnosis and treatment
ity levels. In Zambia, there have been no national also increased, particularly at the community level,
representative population-based studies to deter- with 25% of Zambian population accessing the ser-
mine the burden of NCDs. Studies that have been vices through community health workers.
conducted found that the prevalence of hyperten- The efforts to fight malaria received nearly $60m in
sion in adults ranged between 25.8% and 32.8% in 2015, with the biggest contributions coming from
the Government of Zambia and USAID/PMI.
190 HEALTH ANALYSIS

HIV/AIDS: UNIVERSAL HEALTH COVERAGE:

The SADC region remains the area most affected Zambia, through its WHO office, joined the Univer-
by the HIV. According to the UNAIDS 2010 Global sal Health Insurance Partnership in 2016. The Gov-
Report, of the total number of people living with HIV ernment of the Republic of Zambia is working to-
worldwide in 2009, 34% resided in ten SADC coun- wards providing Universal Health Coverage (UHC)
tries. Zambia has an estimated prevalence of 12.4% so that everyone has access to quality health care
in its adult population (2016), down from all time without having to face financial hardship. At present,
high of 16.2% in 1998. There has been a gradual Zambia provides the population with basic health
and continuous decline in the prevalence since the care services free of charge at the primary health
end of 1990s and the country has made significant care level. However, capacity constraints mean
strides in scaling up high-impact HIV preventive in- that, in practice, the health services provided are not
terventions. The uptake of HIV testing services has always reaching the people who need them most.
risen from 14% in 2001 to 37% in 2013 and from 9% An important objective of the UHC Partnership is
in 2001 to 46% in 2013 among men (15-49 yrs). The the strengthening of the aid effectiveness princi-
number of people living with HIV accessing ART has ples of the International Health Partnership (IHP+),
increased substantially from 3% in 2004 to 62% in to which Zambia is a signatory. These principles
2015. Likewise, the mortality attributable to AIDS are fundamental to the proposed roadmap, thus
has reduced from an estimated 65,000 in 2000 to contributing to the alignment of development as-
20,000 in 2015 among adults. sistance by national and international partners to
Stigma is the most important challenge facing the National Health Strategic Plan. The Ministry of
Zambia. There is no shortage of information about Health has embarked on an implementation plan
prevention and treatment but too little is done to assisted by the WHO Zambia country office, with
change attitudes and combat stigma. Insufficient ef- modified health financing strategies, systems and
forts have been extended to tackle the ignorance in reforms put in place towards UHC by 2018.
Zambia, a profoundly Christian nation where absti-
nence is endorsed above condom use and subjects
such as sex outside marriage or homosexuality are PRIVATE MEDICAL INSURANCE:
anathema to the church. The penetration levels for private medical insur-
ance remains very low. In 2014, private medical
Tuberculosis: insurance accounted for only 1.6% of total health
TB is one of the major non-pneumonia respiratory sector financing. Around 90% of PMI premiums
infections and remains a majorhealth problem in are covered by corporate health plans and some of
Zambia, contributing to a significant proportion of the larger companies offer medical cover as part of
“Zambia has met its 2015 all hospital admissions in the country. This is despite their employee-benefit packages. One of the preva-
MDG TB target of 85% suc- significant achievements made by the National TB lent challenges is the competition insurance com-
cess rate.” programme. Zambia is amongst the highest TB bur- panies’ face from unregulated and quasi-medical
dened countries in Africa. Nonetheless, the preva- insurance schemes, private hospital health plans
lence for all ages and all forms of TB has declined and employer-based health funds. Also, the lack
steadily to 406 cases per 100,000 populations in of information poses a significant shortcoming to
2014 from 631, cases in 2004. Efforts still need to be financial inclusion as, according to the 2015 Fin-
made to bring Zambia on par with the Sub-Saharan scope survey, 88.3% of Zambians have never heard
average of 282. of health insurance and its benefits. For middle to
The country has achieved a downward trend in the upper income individuals and international corpo-
TB mortality rate (decreased from 35 per 100,000 rate staff, there is access to advanced paramed-
people in 2000 to 25, in 2013). In line with this, the TB ics, ambulance and air ambulance facilities along
treatment success rate has been on the rise since with insurance to cover the cost. Lusaka is just over
the 2000s, and Zambia has met its 2015 MDG TB 1,000 km away from Johannesburg by aircraft and
target of 85% success rate. the patient’s choice of required medical attention in
The Ministry of Health (MOH), has continued to the case of evacuation.
show commitment to providing the latest knowledge
and developments of TB control in Zambia. The
Zambia National Health Strategic Plan 2017 – 2021
stipulates a goal to reduce the number of TB deaths
by 40% in 2021 and to end the TB epidemic by 2035.
 HEALTH ANALYSIS 191

HR: PHARMACEUTICALS:
One of the priorities of the Ministry of Health remains The Zambian pharmaceutical industry has contin-
an appropriately trained, skilled and well-motivated ued to experience strong growth, due to the con-
workforce. Although the last five years have shown tinued increase in population and steady industri-
significant achievements in human resource per- alisation rate of the sector. The manufacturing of
formance, the shortage of skilled health care pro- pharmaceuticals in Zambia holds great promise
fessionals remains acute. To address the demand, with the rise in consumer spending, improved di-
new training institutions – both public and private agnostic services and increased medical needs “Zambia currently
– were opened, yet the numbers of trained health all paving the way for a guaranteed investment manufactures 30% of the
workers remain low. The current number of health success. The Zambian pharmaceutical market drugs on the Essential
workers in the health sector is 42,630 (est.) against reached $241m by 2014; however, it still faces chal- Medicine List locally.”
the required 63,057. Only 68% of the positions ap- lenges that prevent the country from establishing a
proved are filled as the sector faces continued scar- strong local manufacturing base and has therefore
cities. The shortage cuts across a wide spectrum of led Zambia to depend on imports for its medicinal
health professionals – clinicians, nurses, pharmacy needs. Most of current expenditure is on pharma-
technologists, laboratory technologists, radiogra- ceutical goods, mainly from India.
phers, physiotherapists, and environmental health Zambia currently manufactures 30% of the drugs
technologists. The training establishments are not on the Essential Medicine List locally. As with most
adequate to meet the demand and there are nota- of its regional neighbours, Zambia has high disease
ble budget restrictions to employing teaching and burdens that require high consumption of pharma-
other support staff. Furthermore, the infrastructure, ceutical products. With only seven local producers
equipment and other training requisites need to be and around 30 pharmaceutical trading companies
improved to enhance the overall quality of training. the market is poised to expand.
With the high incidence of HIV/AIDS, TB and ma-
laria, the pharmaceutical sector provides opportuni-
ties for the supply or local production of essential
UNDERSUPPLY: drugs, the storage and logistics services of these
While the numbers of staff employed at health cen- medicines and the provision of raw materials to
tres and hospitals has increased there is still an manufacturers.
acute need for an effective delivery of the minimum
health care services. The main deficiency remains
the unequal distribution and inappropriate skills-
mix. Rural areas continue to face severe human
resource shortages. A disaggregation of health
workers shows that the distribution is skewed to-
ward urban areas and the low population density
of Zambia poses a serious challenge to the optimal
distribution and utilization of health workers for ef-
ficient delivery of health services. Public facilities
in rural and remote areas have the lowest number
of health workers and often, the highest-qualified
medical professional in a town or village is often a
health worker with only basic qualifications.
To address the severe undersupply, the Ministry of
Health has outlined incentive structures for health
workers to improve their performance and motiva-
tion and the distribution of specialist health profes-
sionals. In addition, one of the priorities is providing
appropriate training to increase the annual output of
the education institutions to mitigate the shortages
of qualified health workers.
192 HEALTH ANALYSIS

Health Sector Strategic Programmed

Approach:
The GRZ has prioritized health as a key economic model postulates that poor social and economic fac-
investment to spur the country to become a pros- tors impact health throughout an individual’s life;
perous middle-income country by 2030. The NHSP these factors could be isolated at the personal,
(2017-2021) is anchored on a National Transforma- societal, and physical environment levels.
tion Agenda which recognises the importance of
the health sector in improving national productivity. The full Zambian National Health Strategic Plan
Investments in the health sector will be treated as 2017 – 2021 can be referenced here:
inputs toward raising overall productivity and hence http://www.moh.gov.zm/docs/ZambiaNHSP.pdf
contributing to economic growth. The focus for the
NHSP shall be on attaining Universal Health Cover- E-Health Strategy:
age using the primary health care approach. Un- The Ministry of Health (MoH) released its E-Health
derpinning the approach is health system strength- Strategy in July 2017 recognising that the health
ening across the continuum of care and spanning delivery process depends on health information,
promotive, preventive, curative, rehabilitative and technology and research. The plan outlines several
palliative health services. The investment in the solutions to be developed by the MoH to improve the
health sector shall be informed by key pillars of a access to health care and provide high quality ser-
functional health care system, namely service deliv- vices. Some of these include computerised point-of
ery, human resource for health, health management -care services to facilitate real-time referral services
information and research, medical products, vac- and improve quality of care, telehealth services to
cines, supplies, health infrastructure, equipment, facilitate cost effective provision of specialist servic-
transport, financing, leadership, and governance. es to communities, electronic surveillance systems,
The NHSP uses a model that incorporates underly- electronic performance reporting and analytical
ing socio-economic factors impacting health systems to optimise the use of resources invested
behaviours. The socio-economic determinants in responding to the health needs of the population.
HEALTH ANALYSIS 193
194 HEALTH INTERVIEW

A Very Practical Approach

Dr Chitalu Chilufya,
Minister of Health

BRIG: What are the greatest investment opportuni-

ties in the Zambian Health sector and how do you see
the potential for cooperation on the institutional side
and finding ways to enhance levels of care by enter-
ing into a PPP structure with a foreign partner?

Dr. Chitalu Chilufya:

Health is central to sustainable development and Universal Health Coverage by the year 2030. Human
only a healthy citizenry can drive our socio-economic resources are another key result area of top priority.
agenda. To attain the goals outlined in the country’s Our challenge is providing adequate numbers of spe-
development plan Vision 2030, we have prioritised cialists. We have numerous public-private partnership
health, as a strong labour force begins with a healthy opportunities to enable private sector participation in
citizen. A multi-disciplinary approach is essential as developing the workforce. There are a number of pri-
there are many underlying factors, such as nutrition, vate medical universities opening in Zambia that will
water sanitation, basic education and household in- surely tap into the regional market as our human re-
come, so we need to coordinate coherently with the sources challenges are not unique and pertain to the
Government and private sector players in other sec- whole region.
tors. Our agenda is to strengthen the health system
and services by using the primary health care ap- Zambia has embarked on a transformational path of
proach and we have identified key result areas to local manufacturing and supply of medical products
provide opportunities for the private sector. Firstly, it is to better manage its supply chain for vaccines and
service delivery. To provide effective health-delivery, medical products. I can assure that the Ministry of
we need to invest in the infrastructure of primary care. Health will be biased towards local manufacturers
Today, Zambia lacks more than 2,000 health centres and will favour anyone who sets up a manufacturing
and to increase access to healthcare we will embrace plant here. Again, the regional market is of utmost im-
partnerships that enjoy private sector funding. Fur- portance as the Zambian manufacturers can further
thermore, we are embarking on a modernization pro- expand into our eight neighbouring countries. We will
gramme to negate the need for treatment abroad and guarantee the market for the local manufacturers of
boost medical tourism from neighbouring countries. drugs.
The private sector is encouraged to invest in highly
specialized hospitals in cardiac, renal and neurosur- Health Information Management systems is an-
gery as Zambia can serve as a launch board to the other focus area. Zambia will go digital and pursue
regional market of SADC and COMESA. partnerships to implement information management
systems. Also, our equipment needs for diagnostics,
Secondly, we recognize the need for innovative imaging and therapeutics are immense and we re-
healthcare financing and not to over-rely on state quire private investment to keep in tandem with global
funds and treasury. We have started discussing the modern practices.
national social insurance scheme with the stakehold-
ers, working on the systems design and we will in- Zambia has cemented many strategic partnerships.
troduce it this year. The National Insurance Scheme We work with our partners – the US government,
will bring us closer to universal health coverage, shy- USAID, the Swedish government and the UN organi-
ing away from out of pocket payments. It will ensure sations on the prevention of communicable diseases
more efficient service delivery and we aim to have and building infrastructure.
EDUCATION
High private sector participation in tertiary provision

Strong demand in post-primary education facilities and teaching materials

Increased need for skills development and vocational training

196 EDUCATION ANALYSIS

New Skills
Building the country’s human capital
With education progressively becoming the primary de- private schools are managed by the community or a
terminant of overall development in the emerging knowl- corporate business, especially in the mining areas of the
edge economy, Zambia has recently seen an increase in country and may follow the northern hemisphere school
investment and resources made available at all levels of year with a midyear commencement.
the education sector. Private schools follow the local Zambian curriculum or
American or British schooling systems with some offering
“Zambia has recently seen The Government has remained committed to the devel- the International Baccalaureate, and, generally offer high
an increase in investment opment of the education sector and financing is gradually standard of education, better opportunities and learning
and resources made avail- shifting toward supporting the upper levels of education facilities. The fees, predominantly at the more affluent pri-
able at all levels of the edu- in a much-needed step to expand secondary and higher vate schools, can be high and out of the reach of many
cation sector” education. The Technical Education, Vocational and En- Zambians.
trepreneurship Training (TEVET) sub-sector remains Zambia signed the Incheon Declaration in May 2015
relatively underdeveloped compared to other sub-sec- which makes the first nine years of education compulsory.
tors despite the need for skills development in a country
where unemployment and underemployment are persis- FUNDING:
tent challenges. In the last decade, public education expenditure has
grown steadily, ranging between 15.3% and 20.5% of
EDUCATION SYSTEM: the total Government expenditure. The education sector
The general education system in Zambia is divided into received 16.5% allocation of the overall national budget
three levels – Primary school (Grade 1 to Grade 7), Junior in 2017, slightly lower than the 17.2% share recorded
secondary school (Grade 8 to Grade 9), and Upper sec- in 2016. The social sector, comprising of environmental
ondary school (Grade 10 to Grade 12). English is the prin- protection, housing and community amenities, water sup-
cipal language of instruction in Zambian public schools ply and sanitation, health, recreation, culture and religion,
and children are also required to learn an additional lo- education accounted for a 32% share of the total budget
cal language, conditional on their provincial district. The in 2017 with education representing the biggest portion of
school year in Zambia runs from January to December, the social sector allocation at 51%.
and is divided into three terms. Public education is free up Primary education, due to the Government’s policies of
until Grade 7, however, the households are expected to prioritizing education for all at the lower end of the educa-
fund school uniforms and learning material. tion spectrum, received the largest share of general edu-
Private schools run independently of the Government cation budget compared to secondary education. Primary
and are more flexible in their admissions procedures, cur- education received 67.9% of the general education budg-
ricula, and language of instruction. Many private schools et, whereas secondary education accounted for 24.1%,
can trace their roots back to Christian missionaries in higher education of 7.4%, and early childhood education
Zambia and are often managed by a specific denomina- received 0.6%.
tion. There are several Islamic schools in Zambia. Other
 EDUCATION ANALYSIS 197

Free primary education policy has proven to be faulty. cordance with the current market needs and trends. Sec-
Though tuition fees have officially been eliminated, ondary schools are funded mainly through out-of-pocket
schools continue to collect various fees from students spending of students and households – 98% of schools
hampers students from poorer households accessing charge fees to students. This has led to disparity in school
schools. A study by UNESCO shows that school grants resources between relatively rich and relatively poor
do not reach 30% of the schools in the country, which school areas. Due to the non-provision of pro-poor tar-
results in school fees. Secondary school grants are re- geted school grants or scholarships by the Government,
ceived directly from the enabling-economic Ministry of Fi- the current situation has resulted in fewer resources to the
nance, while the implementation of primary school grants poorer schools and better quality of education in wealthier
is challenging due to the remoteness of primary schools schools.
and additional charges by commercial banks for main-
taining bank accounts. TEVET:
Skills are vital for economic development and sustain-
CHALLENGES: ability. The advancement of the education sector includes
Because of enabling economic policies over the last dec- technical education and entrepreneurship training as a
ade, Zambia has experienced a noteworthy improvement means to increase employability opportunities. To adapt
in almost all economic sectors including education. How- to the market needs of the future, the Ministry of Higher
ever, despite constant funding of the education sector, Education of Zambia has shifted its focus from not just
multiple challenges persist. Notably, these include lack of providing technical and vocational training, but is adding
efficiency and effectiveness in resource use, high teacher entrepreneurial training to enable graduates to run their
absenteeism, low education quality, insufficient teach- own businesses. The technical education, vocational and
ing and learning materials, high internal inefficiency and entrepreneurship training graduates are still outnumbered
low time-on-task, among others. Also, regardless of the in the labour market in Zambia due to the perception of
increase in public spending on education, especially pri- technical education as a low-valued option.
mary education, a public expenditure review by the World The Government of Zambia has introduced a two-tier
Bank has shown that the quality of education is still lag- system at the secondary technical education level-one
ging. The study finds that primary education measured tier for students who follow an academic path and the
by Grade 5 pupil learning outcomes has remained low other tier for those who pursue a technical path. The stu-
compared to other lower middle-income countries and dents of the technical tier at grades 8–10 can undertake
has dropped slightly in recent years. The skewed distri- technical subjects, besides academic classes, to acquire
bution of public resources towards primary education ac- labour market-oriented skills at an early age. The Minis-
counts for low progression to secondary level and thus, try is currently undertaking this initiative as a pilot with 47
to tertiary level. A large share of the educational spending secondary schools and TEVET institutions. International
is allocated towards personal remunerations. In 2016, development partners, like the government of China
teachers’ salaries accounted for 93% of the entire primary have contributed to skills development in the country to
education allocation, with very little left to acquire teaching bridge the gap between the needs of the industry and the
aids and books. Insufficient number of teachers, high ab- training offered. The Chinese government has set aside
senteeism of teachers and unsatisfactory levels of teach- $50m to build a vocational college to address the skills
ing and learning materials, including textbooks contribute gap in mining companies. The college will enroll grade 12
to the low quality of education. school-leavers and once they complete their education,
The Government’s efforts to expand post-primary educa- they will be offered jobs in Chinese mining companies op-
tion are yielding results as more students are completing erating in Zambia. “The Chinese government also wants
primary education and enrolling in secondary education. to prepare Zambian lecturers who will be sent to China
The progression rate from Grade 9 to Grade 10 increased for training and come back as lecturers at the vocational
to 48.89% in 2015. However, the current capacity of the training college. We hope to train 40 people for a start”,
secondary education is still fractional and can accom- China Non-ferrous Metal Mining group director of training,
modate about 30% of the students currently enrolled in Liang Chimin said.
Grades 1 to 5. The Government is investing in construc-
tion of schools with 118 schools being built across Zam- HIGHER EDUCATION:
bia and the Government has voiced plans to upgrade the The Higher Education Authority of Zambia have 58 reg-
remaining 1,800 basic schools into secondary schools istered private higher education institutions in 2017. The
and to provide teaching materials that are in short sup- higher education sub-sectors in Zambia has over the last
ply. These rapid expansion plans, although commend- five years become saturated with private sector players
able, still lack the strategic preparations, namely quality seeking to fill the gap in providing high quality education
teacher development and curriculum improvement in ac- to the growing population. The universities and colleges
198 EDUCATION ANALYSIS

catering to a wide spectrum of learners with programmes up their premises here in Zambia and I expect this sector
spanning sectors from medicine to tourism have been to grow rapidly”. The University of Zambia (UNZA), es-
forced to become more innovative and adapt to the tablished in 1966 is the oldest public university in Zambia
needs of the highly competitive market and address the and remains the highest ranking educational institution in
increasing shortages in the labour force. Increased inter- the country currently ranking 2,295th worldwide and 79th
national partnerships, established between the learning in Africa, according to University Rankings 2017. Upon its
institutions in Zambia and universities and research cen- establishment 1966 with a total number of 312 students,
“Private sector players tres worldwide, has also helped to improve the standards UNZA has now a total number of over 30,000 students
seeking to fill the gap in of education and ensure that the degrees awarded by the that includes parallel and distance programmes.
providing high quality edu- universities locally are accepted and recognized world- Public universities rely on Government grants for about
cation to the growing popu- wide. Such international ties represent notable invest- half of their annual budget and around 48% of the over-
lation.” ment prospects. In the words of Hapenga Kabeta, the all funding is raised through tuition fees, commercial and
interim Vice-Chancellor of Kenneth Kaunda Metropolitan research activities, and other student fees. The higher
University, “The greatest investment opportunities I see in education system in Zambia at the state-funded level
the education sector are building strong collaboration with suffers from weak resource management and ineffective-
universities here in Zambia and the region in terms of stra- ness in promoting the fairness in access to Government
tegic partnerships, research and faculty exchange. Also, funding among students. The current bursary scheme is
there are many green field investment opportunities in ed- a loan scheme that has proven to be inefficient with no
ucation sector – many international universities have set recovered loans up to date. The system was introduced

TERTIARY ENROLLMENT
2.50

2.50

2.50

2.50

2.50

2.50
1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000
 EDUCATION ANALYSIS 199

in 2004, with the repayment period of the loan at 10 years of university education suggesting that a possible option
for a four-year programme, with a one-year grace period. for improving the university management is to gradually
Up until 2017, due to unclear management and collec- introduce performance-based funding, such as competi-
tion authority of the loans, none of the students had repaid tive funding. Dr Alvert Ng’andu, the Executive Director and
their study loans. In 2017, the Ministry of Higher Educa- CEO of Zambia Centre for Accountancy Studies, ascribes
tion involved the Public Service Management Division to the success of that learning institution has been its ability
trace the former students to start the recovery of the loans to operate autonomously, enabling it to make critical deci-
from 4870 beneficiaries employed in Government institu- sions quickly and respond immediately to market dynam-
tions. ics. Public universities have also begun raising revenues
To remedy the situation, the Education Public Expendi- from their own research and business activities through,
ture Review in Zambia, published by The World Bank in introduction of new entrepreneurial programmes, com-
December 2015 recommended giving public universities mercialising certain service units and capitalising on the
academic and financial autonomy to improve the quality land resources through real estate development.
200 EDUCATION INTERVIEW

High Achievers
Dr Alvert N. Ng’andu, Executive Director, ZCAS

BRIG: Academic institutions are often theoretical BRIG: What is your appetite for innovation and
and devoted to academic knowledge, you have a how do you challenge the traditional ways of do-
very practical approach. ing business?

Dr Alvert N. Ng’andu: Dr Alvert N. Ng’andu:

We believe that academic or training institutions Our appetite for innovation is high, we challenge
must prepare people practically for the world of ourselves as an institution to innovate in what-
work, not for them to go and theorise. They must ever we do so that we can continue to improve
be ready to be productive as soon as they leave and enhance the quality of what we are doing.
the institution and should not just become so after We challenge our staff to present any bright ideas
one or two years. We are introducing our account- they have to innovate how we operate and how
ing students to at least one accounting package we deliver on our programmes. They are encour-
so that they will be familiar to accounting software aged to present those proposals and we consider
if their employer uses one. This is one illustration them on their merits. One innovation that we are
of what we think should be happening and even very proud of is that we were the first and for a
on the academic side, we try to find ways of en- long time, the only distance-education provider to
suring that our students can be productive very register students on an online learning platform in
quickly when they get into the workplace. addition to the standard course modules. The stu-
dents can collaborate and interact with each other
as well as their lecturers. We have since extended
the online platform to our full-time and part-time
students as well.
 EDUCATION INTERVIEW 201

BRIG: How does ZCAS collaborate with industry

and/or other academic institutions?

Dr Alvert N. Ng’andu:
In terms of our professional and academic pro- also useful for institutions to collaborate with us
grammes, we have collaborations with several because when students finish here, clearly they
institutions. We collaborate with The Athlone In- will be joining the work force and if the students
stitute of Technology in Ireland on one of their ac- have gained some experience, they become a po-
counting degree programmes and with The Uni- tential employee for the institution that they have
versity of London on some economics and finance worked for.
programmes. With The University of Greenwich, We also have some specialised collaboration, the
there are several business administration and most visible is with Vodafone. There is a perma-
computing programmes and MA and MBA pro- nent presence of Vodafone, through a kiosk, right
grammes (International Business). We had an here on campus. They use our students as brand
Executive MBA programme with the University of ambassadors to promote their products and they
Lancaster. have offered a number of our student’s positions
Locally, we collaborate with the University of Zam- through the internship placement programme. We
bia and have eleven undergraduate degree pro- collaborate with Vodafone at these three levels
grammes with them. They are our largest collabo- and would like to see many more institutions do-
rator and the only one in this country other than ing the same thing as they will experience ZCAS’s
the professional associations including ACCA, product and be in a position to decide whether or
CIMA, Institute of Marketing, Zambian Institute of not to employ our students.
Human Relations, ABE, ZICA and CIPS and the Another area that we are growing is a training and
Zambian Institute of Purchasing and Supply. a degree programme in entrepreneurship. Once
our students complete this programme and go on
BRIG: How do you see collaboration between to become entrepreneurs, they will have built a
ZCAS and the private sector developing? network and will know where to go for assistance.
We also run career fairs to encourage this col-
Dr Alvert N. Ng’andu: laboration with industry and we invite institutions
That has already developed to some extent, but to show students what they do. We also run what
there is room for more development, perhaps at we call an executive chat every month and invite
two or three levels. The first level is that ZCAS CEOs and businessmen to talk to the students at
prides itself and desires to have its students ex- lunchtime. The students have the opportunity to
posed to commerce even before they have com- meet this highly-regarded person and ask them
pleted their studies. We encourage collaboration relevant questions. That creates a rapport with the
with businesses so that students are placed in business community and allows students to expe-
those institutions when they are on vacation and rience the real world and what they need to do to
they can gain work experience. We think that it’s be successful when they leave the institution.
202

Ngombe mukutwaleta kanyu meyi mabi. (Lozi / Luyana)

The first cow does not drink dirty water.
Encourages someone to start a venture before others do. Go
into new markets, not those that are almost flooded.
STARTING A BUSINESS
IN ZAMBIA
204 STARTING UP ANALYSIS

Starting a Business in Zambia

A practical guide to procedures
Starting a business in Zambia is relatively easy cation immediately and get written confirmation.
and the requirements are generally not that on- Online, does work, but if the officer concerned has
erous. Some of the procedures are as fast as queries, then the process can become protracted.
anywhere in the world such as company and tax
registration. In most cases it would, however, be A maximum of three names can be proposed. The
advisable to engage experts who have the staff to names will be considered in the order of listing.
tackle all of them simultaneously or at least in im- If the first choice is turned down, the second or
mediate sequence. third name may be considered. Once the name is
accepted, it is automatically reserved for a period
PACRA: of 30 days. After 30 days, the name clearance ex-
The Patents and Companies Registration Agency pires.
(PACRA) is a semi-autonomous executive agency
of the Zambian Ministry of Commerce, Trade and The name of the business must be in line with
Industry. Its principal functions are to operate a le- your principal nature of business. For instance, if
gal system for registration and protection of com- the main line of business is offering security ser-
mercial and industrial property and to serve as a vices, you cannot call the business ‘Non Such
legal depository of the information tendered for Restaurants’. This would be misleading.
registration. It comprises two core departments;
Industrial Property and Commercial.  Do not choose a name that is confusingly similar
to what already exists or the same as a well-known
The very first step before the statutory registra- company. The words “well-known name” mean a
tions can start is to get approval for the name of name associated generally by the public with a
the company. PACRA is responsible for vetting company, whether within or outside the Republic,
proposed names and their guidelines are there to and in respect of which confusion is likely to arise
protect existing companies and to ensure that no if registered. If you are opening a company with
misleading descriptions are used. a name linked to one of the shareholders such
as Ohio Business Machines Ltd, you will need to
NAME REGISTRATION: take written permission on an OBM Ltd letterhead
Name Clearance can processed at any PACRA of- and a copy of their company registration which will
fice or www.online@pacra.org.zm and an applica- make the decision in your favour easier.
tion for approval of a name can be made in writing
on Business Form III – Application for Business Do not choose offensive or undesirable names.
Name Registration, which can be downloaded This means that a name should not be in the form
from www.pacra.org.zm. If one goes in person of an insult as this is against public policy.
with the form, it is possible to process the appli- Do not choose deceptive or misleading names.
 STARTING UP ANALYSIS 205

For instance, if you are just starting your small than fifty (50) shareholders. It nevertheless may
business, you will not be allowed to use words have the capacity to enter into any type of legal
such as ‘International’, ‘Countrywide’ or ‘World- activities as long as its articles do not restrict it. As
wide’ because these words suggest that you have stated above, this type of company is prohibited
a big multinational company, which could be mis- from making any invitation to the public to pur-
leading to the general public. chase its shares or debentures. In case it winds
up and its assets are insufficient to cover its liabili-
The name that you choose should convey the ex- ties, the liability of its shareholders is limited to the
pertise, value and uniqueness of the goods and amount left unpaid on their shares.
service you will be offering to the general public.
For instance if your company is called Tigwirizane A company limited by guarantee does not have
Best Advertisers, it means that you must be the a share capital and is not permitted to carry on
best indeed in the business of advertising. If not, business for the purpose of making a profit for its
your company name could be said to be deceptive members or for anyone concerned in its promo-
to the general public. tion or management. These are normally formed
in order to help the community benefit from a cer-
Choose a name that is informative, such that the tain project. In Most cases, these are organisa-
public should be able to know your line of busi- tions such as churches, foundations, trusts, etc.
ness just by glancing at your business name.
At the time of formation, each member must sign
COMPANY REGISTRATION: a declaration of guarantee, specifying the amount
There are broadly two types of companies in Zam- he undertakes to contribute if the company is
bia, namely: wound up. In case it winds up and the assets are
insufficient to cover its liabilities, the liability of its
1.    Private Limited Companies; and, members is limited to the amount so guaranteed.
2.    Public Limited Companies (PLC).
An Unlimited Company is one that has a share
capital but whose members have unlimited liabil-
PRIVATE COMPANY LIMITED: ity for the company’s debts and liabilities. In other
This is a registered company formed and owned words, whatever is incurred by the company is
by individuals other than the Public. Its name will also deemed to have been incurred by the mem-
always end with the word “Limited”. The minimum bers.
number of directors and shareholders required for
a private company is two (2) of which 50% must In terms of membership, it also may not have
have residential status in Zambia as opposed to more than fifty (50) shareholders. There are ex-
having to be Zambian Citizens. There is also need ceptions, however.
for at least two separate shareholders which can
be individuals or companies, all of which can be PUBLIC LIMITED COMPANY:
based outside Zambia. A Public Limited Company states in its articles of
association that it is a “Public Limited Company”.
The following are the types of private limited com- Its name always ends with the words “Public Limit-
panies that can be incorporated: ed Company” mostly abbreviated as “PLC”. It has
a share capital and its authorised minimum capital
1.    Company limited by Shares; is K1m. It has the capacity of entering into any
2.    Company limited by Guarantee; and  business activity unless restricted by its articles.
3.    Unlimited Company.
This type of company can invite the public to buy
companies limited by shares have a share capital its shares. It can therefore list its shares on the
and are formed or incorporated for purposes of Stock Exchange.
carrying on business to derive a profit. Currently,
the minimum required authorised capital for a pri- If it winds up and its assets are not sufficient to
vate company other than banks, insurance and cover its liabilities, the liability of the shareholders
other financial institution, is K15,000. is limited to the amount left unpaid on their shares.
A Private Limited Company may not have more
206 STARTING UP ANALYSIS

COMPANY FORMS: SUBMISSION:

There are some important requirements that Once all the forms are complete, duly signed and
come to light when one begins to complete the witnessed, make at least one copy of each and
forms and dependant on where the required docu- submit two files, one original and one copy. It is
mentation is located, non-procedural internal de- advisable to submit a number of bound Articles of
lays can occur. They must be type written and if Association as PACRA will stamp all documents
the officer finds an error, you will be requested to in the copies file and return them to the company.
have a typewriter XXXXXXXXXXX out the error Once the officer has checked the documents and
and then type in the correction. This can be done there are no errors, they will capture the informa-
quickly and cheaply at nearby business centres. tion immediately into the system, give you a ref-
These are the forms and their main requirements: erence and you can pay the registration fees im-
mediately. The Certificate of Registration can be
Form 1: Public Limited Company, Form 2: Private processed within an hour if there is a need for it
Company Limited by shares, Form 3: Company for example to open banks accounts with on-site
Limited by Guarantee, Form 4: Unlimited Com- desks of banks like Investrust.
pany.
TRADEMARK PROTECTION:
These forms vary by type of registration, but all Even though Zambia is a member of ARIPO, the
need the specific company details as well as trademark aspects have not yet been domesti-
those of the first directors, company secretary and cated (the Banjul Protocol) under the ARIPO Pro-
shareholders. Certified passport copies as well as tocol. Trademarks should therefore be registered
corporate registrations of shareholding companies with PACRA for them to be officially recognized
need to be attached. The type, number and value and protected.
of shares by shareholder need to be declared.
It is a requirement that a legal practitioner files on
Form 5: Public Limited Company, Private Compa- behalf of the applicant and in order to proceed,
ny Limited by shares, Unlimited Company, Com- they will require the following:
pany Limited by Guarantee • the sample logo of the trademark to be reg-
istered;
This is consent to be a first director or company • a description of the goods or services the
secretary and full personal details are needed. trademark will be used on to enable them to
All directors can sign on the one form or multiple identify the class(es) under which the trade-
forms can be submitted. mark application should be made in accord-
ance with the law in Zambia; and
Form 11: Public Limited Company, Private Com- • the full name and address of the trademark
pany Limited by shares, Unlimited Company, and applicant to enable them to complete an “au-
Company Limited by Guarantee thorization of agent form – TM form 1” for
A declaration of compliance with the requirements your execution.
of the Company Act is in terms of the formation
of a company by a legal practitioner, company With the above details, they will be able to advise
secretary or first director before a commissioner on the registration fees payable at PACRA.
of oaths.
The total fee quoted would then cover the regis-
Articles of Association are for: ter of a trademark in Zambia, where the following
Public Limited Company, Private Company Lim- steps must be undertaken:
ited by shares, Unlimited Company an application to register a trademark and logo
will have to be made and a sample of the actual
LIMITED BY GUARANTEE: trademark and logo will be affixed to the applica-
PACRA provides standard articles of association tion form. A certificate of lodgment of the applica-
that can be used or the subscribers can submit tion form will be issued by PACRA approximately
their own. It does need some reformatting and a one month after receiving the application;
spell check, but there are no material errors and PACRA will then go through its database to en-
they can be used as is. sure that a similar trademark and logo has not
 STARTING UP ANALYSIS 207

already been registered and this process takes make the payment immediately with minimal du-
approximately one month; plication of information.
Once PACRA has ensured that a similar trade-
mark and logo has not already been registered, NAPSA 
an advert will have to be placed in the Trademarks A company should register with NAPSA immedi-
Journal for a period of two months; and if there is ately it starts its operations and can do so even
no opposition to the registration of the trademark if it does not have any employees in which case,
and logo after the two month period that the advert no returns are submitted. As soon as they employ,
has run in the Trademarks Journal, then PACRA they should register the employee.
will proceed with the registration. 
Everyone in any form of employment including for-
ZAMBIA REVENUE AUTHORITY eigners that are of age 16 to 55; both ages inclu-
Zambia’s tax regime has a number of aspects that sive are covered, subject to exemptions under the
may not be familiar to many outside investors and NPS Act. Foreigners have to register as members
it is advisable to appoint specialists to ensure that and to have contributions deducted and paid to
the endeavour remains compliant. It all starts with NAPSA on their behalf; unless they have diplo-
registering for a TPIN, an acronym for Taxpayer matic status or if they work for a company that has
Identification Number and all relevant tax catego- the status of an International Organization. NAP-
ries are then associated with that number. SA is mandated by the NAPSA Act to prosecute
defaulting employers.
Registration is electronic and relatively easy. The
form is downloaded from the ZRA website and The National Pension Scheme is contributory;
one selects all the relevant categories from Turno- meaning that workers covered by the scheme are
ver tax, Withholding tax, PAYE, Property Transfer supposed to make monthly contributions through
Tax, Presumptive Tax, Income Tax, Mineral Roy- their employers in order to garner rights that enti-
alty, Medical Levy, VAT Excise and Base Tax. It tle them to benefits provided by the scheme.
is best to register for those categories that are
immediately relevant. You can always add others Presently, the monthly contribution rate is pegged
later. If not, there is an option to submit nil returns. at 10% of a worker’s gross monthly earnings sub-
ject to the prevailing contribution ceiling in the
calendar year in which the worker earned the in-
Depending of the categories indicated, there will come. The contribution ceiling is revised annually
be additional forms to download and complete. By and the revision takes effect from January of each
the end of the submission process, you will have a year.
TPIN and secure access to your account. You will
also get an Acknowledgement of Receipt, which The following constitute gross earnings for NAP-
allows you to track the progress of the submis- SA purposes: basic salary, leave pay, commuted
sion. If you are concerned about a delay, you can days, overtime, bonus and all allowances (house,
email, call or visit ZRA. In each case, the officer transport, uniform etc.) The employer is howev-
concerned is likely to be highly responsive in deal- er, mandated to deduct only half of the worker’s
ing with any unnecessary delay. Once registered, monthly payable contribution from the employee’s
your next submission deadline is likely to be the earnings and then add an equal portion.
14th of the next month. It may be a Nil Report, but
if late, penalties will start accruing. One can apply Employers are also required to remit workers’
formally for penalties to be waived and each case monthly contributions within 10 days of the end of
is judged on its merits. To prevent this, it is advis- the calendar month to which the earnings relate.
able to select a specialist until your finance team i.e. contributions for salaries earned in the month
is fully in place. of July should be paid by the 10th of August. The
Making payments is now electronic and the pro- due date is the end of each month; the extra 10
cess is far simpler than before. You register for days are just a grace period. Any contribution in-
electronic payment, so that when you upload the cluding underpayment that is not paid within 10
return and select electronic payment, you are di- days of the end of the calendar month to which it
rected to your own bank’s portal and are able to relates, attracts a penalty equal to 20% cumula-
208 STARTING UP ANALYSIS

tive for each month or part thereof that the contri- second channel is the Electronic payment option.
bution remains unpaid. Under this option, employers can either send a
Alongside the payment of contributions, employ- hardcopy instruction to their bank or initiate the
ers are mandated to provide monthly returns payment from their bank internet payment plat-
that reflect the workers’ full names, social secu- form.
rity number, national registration card number,
gross earnings and the respective employee and The Authority is delete in the process of enhanc-
employer contribution. Failure by an employer to ing the electronic payment channel in order to in-
submit monthly returns reflecting the above de- tegrate the payment of contributions with monthly
tails results in delays in posting contributions to returns submission. It is hoped that the new pay-
members’ accounts, including possible posting of ment channel will address the current challenge of
contributions to incorrect members’ accounts. poor-information provision by employers through
the automation of data validation before the sys-
The ideal and acceptable mode of filing returns tem accepts the payment for contribution.
is the electronic format. This format has the fol-
lowing benefits: better record management – ease In order to improve the quality of contribution data
filing and retrieval of data, error free assessments, the Authority holds for each contributor, workers
faster and error-free crediting of members’ ac- are encouraged to regularly check the status of
counts and quicker processing cycle for benefits. their contributions by visiting a NAPSA office or
checking via the NAPSA online platform via the
The ultimate effect of submission of poor monthly website napsa.co.zm or using a mobile phone by
returns by employers is that it renders the Author- either downloading the smartphone app or dialling
ity’s desire to process claims within a reasonable *677#.
time frame unattainable.

The Authority has two principal payment channels furthermore, it is an employee’s obligation to re-
through which employers can remit contributions port any errors on the statements in order to en-
to the scheme. The first channel is the Over the sure that when they becomes eligible for a benefit,
Counter (OTC), where employers have to physi- their claim is not only settled in good time but that
cally visit a NAPSA office to make payment. The the correct amount is paid.
 STARTING UP Article 209

Zambian Immigration Wins Kudos

Words by Roy Kausa

The Zambian Immigration department tops the The Zambian Immigration Officers professionally
list of the best customer relations in the Southern welcome clients by greeting them first with the
African region. The survey team at random inter- popular Zambian smile. The customer relations
viewed both officers and the travelling immigrants offices, both in town and Longacres were
during the last three months in 2017. According to extremely friendly to visitors.
this exclusive report, the biggest challenge among
the Immigration departments in this part of Africa For example, in Botswana, Lesotho and South Af-
was lack of communication skills in English. rica the Immigration officials preferred to speak in
local languages when talking to their clients and
This intelligent survey covered Angola, Botswana, felt rather uncomfortable to speak English unlike
Lesotho, Malawi, Mozambique, Zimbabwe, Na- in
mibia, South Africa and Swaziland. According to Malawi and Zambia. The two Portuguese speak-
the latest survey report, the Zambia Immigration ing countries, Angola and Mozambique came sec-
Department scooped the top slot because, during ond to Zambia, despite the language problems to
this survey several factors were speak in English their general customer relation-
considered. For example, the way the immigration ships were good. Malawi came third, followed by
officers greet their clients, the way the officers re- Zimbabwe, South Africa and Lesotho.
spond to different queries from the members of
the public and officers’ general professional ap- The Zambia Department of Immigration headed
proach to immigration duties. by Director General Moola Milomo must be com-
mended for keeping up to the standard of their
The Zambian Immigration department falls under official statement, “The Zambia Department of
the Ministry of Home Affairs in the Zambian capi- Immigration aims to effectively and efficiently fa-
tal city Lusaka. The department has offices in Lu- cilitate and regulate the entry and exit of persons
saka’s city centre and its Headquarters is situated and control the stay of immigrants and visitors in
in a splashy area called Longacres near govern- the country to contribute to internal security and
ment offices, embassies, banks, hotels, and the sustainable socio-economic development”.
cathedral.
210

Sakufangenda ka sikepaa ndambo. (Lozi / Luyana)

What kills a visitor does not kill a local man.
Seek advice from the local people in order to avoid unnecessary
problems. Find out about the way of life of the inhabitants
immediately on arrival.
TAX & ACCOUNTANCY
SMEs offered several exemptions to promote growth
Regulatory framework in line with global standards
Investors qualify for tax exemptions in priority sectors
212 TAX ANALYSIS

How are Companies Taxed in Zambia

A Comprehensive Guide to Tax Framework
HLB Zambia is a Zambian registered international firm CORPORATE INCOME TAX:
of Chartered Accountants and Business Advisors with a this is governed by Chapter 323 of the laws of Zambia.
“With the recent wealth of training and experience in various professional Generally corporate income tax rate in Zambia is 35%
announcement of the fields in Zambia and internationally. HLB is a member of aside farming that is at 10%, Public benefit organisation
2018 Zambian National HLB International, a world-wide network of professional at 15% as well as 15% on non-traditional exports. Income
Budget, one of the main accounting firms and business advisors. As a member earned by companies in the first year of listing on the Lu-
areas of concentration firm of HLB International, it is convenient for the firm to saka Stock Exchange qualify for a 2% discount on the
is the diversification of handle jobs thatcut across international boundaries. The applicable company tax rate in the particular sector. How-
the economy from the Firm is able to utilize the services of specialists within the ever, companies with more than 1/3 of their shareholding
over-dependence on International group whenever need arises. HLB Interna- in the hands of indigenous Zambians, qualify for a 7%
the mining sector to tional is one of the largest accounting consortiums in the discount.
agriculture and other world with more than 1,430 partners, and 9,900 Staff in
sectors.” over 400 offices of the representative member firms in
over 100 countries.
With the recent announcement of the 2018 Zambian Na-
tional Budget, one of the main areas of concentration is
the diversification of the economy from the over-depend-
ence on the mining sector to agriculture and other sectors.
MINING TAX:
Mining still remains the most important contributor to the
country’s GDP and forex as most of the countries forex
is from the exportation of copper. The focus in the min-
ing sector is broadening the tax base and enhancement
FISCAL POLICY: of mineral production to include non-traditional miner-
Government has continued to implement measures that als, such as gemstones and industrial minerals, among
are aimed at restoring fiscal fitness in order to attain in- others. Government will also strengthen the regulatory
clusive growth and development under the Economic framework and enforcement in the sector to curb avoid-
Stabilisation and growth programme. The government ance in payment of taxes and levies. Government will
will implement measures that ensure that the tax system continue with the geological mapping programme for the
is simpler and fairer in order to expand the tax base and remaining 40% of the country. Government will also con-
increase compliance. This will be through continued mod- tinue to support artisanal and small-scale miners through
ernisation and automation of revenue collection process- the Development Mineral Capacity Building Programme.
es coupled with an upscale in tax payer education and Further, promotion of downstream value chains will be
services. Tax incentives will also be rationalised. emphasised.
 ACCOUNTANCY ANALYSIS 213

TOURISM: PROVISIONAL TAX:

• Zero rated for VAT - tourist packages. A provisional estimate of tax payable for the year and is
• Zero rated for VAT - other tourist services. deducted against the final tax payable, The law requires
• No import VAT on all goods temporarily imported in that at least two thirds of the tax liability is paid in provi-
the country by foreign tourists. sional taxes. In the event that taxes are underpaid, an
• Refund to non-resident tourists and visitors i.e. those under-estimation penalty of 25% of the tax that has been
not holding a Zambian passport. underpaid is charged.

ELECTRICITY GENERATION: TAX LOSSES:

Zambia is a land-linked country with many water bodies Losses are carried forward for a period of 5 years to be
that are a source of hydro-electricity generation. Due to an offset against future taxable profits for non-mining com-
increase in consumption of power in the region; Zambia panies. Due to the diversification of the economy and the
has been an exporter of electricity in the region. The Gov- need for private participation in certain industries like elec-
ernment would like to get more investors into this sector, tricity generation, the period to carry forward tax losses is
as a result electricity tariffs were increased as well as bet- 10 years.
ter tax incentives introduced in this industry.
COMMON DEDUCTIBLES:
CAPITAL ALLOWANCES: • All expenses incurred wholly and exclusively for
a tax depreciation on fixed assets at prescribed rates, are business purposes by a company are tax deduct-
provided for in the Income Tax Act. Below are rates on ible. They must be revenue and not capital in nature
qualifying expenditure. and realised. Further, Losses and expenditure must
be offset against the same source income.
• Benefits that cannot be converted into money or
money’s worth are taxable on the company.
• Leasing; these are amounts that cannot be convert-
ed into money’s worth. Any other lease that is con-
vertible into money’s worth is taxable under PAYE.
• Regarding motor vehicles to employees on a per-
sonal-to-holder basis, the benefit to be disallowed
in the employer’s tax computation depends on the
engine capacity of the vehicle.
• Expenses incurred on entertainment, hospitality and
gifts are generally not allowable.

OTHER INCOME:
These are taxed separately, and this includes interest in-
come, dividends, income from letting of property if that is
not the main course of business, royalties etc.

INCOME TAX RETURNS:

this is a ZRA post registration requirement. ZRA operates
a self-assessment system were a tax payer estimate
there taxable profit/loss. Every company and individual
• The 10% initial allowance is only granted in the first has a Tax Payer Identification number (TPIN) as a unique
year that an item is put to use. number for tax purposes. The return must include the fol-
• Furthermore, capital allowances are granted every lowing information:
year based on the item category and the rate pre- • Tax computation and audited financial statements.
scribed in that year, this is on a straight line basis. • Shareholders, directors, place of board meetings
• Disposal of assets. A balancing charge is a means held.
of making sure you don’t claim too much tax relief • Proof of payment of taxes.
on the cost of an asset. It will increase the amount
of profit you have to pay tax on. A balancing charge HUGE TAX PAYMENTS:
is the opposite of a capital allowance, which This may be liquidated through a time to pay agreement
reduces the amount of profit you have to pay tax (TPA) and settled over a longer period of time.
on. Penalties for late submission of a return are K600 per
214 TAX ANALYSIS

month/part thereof and 5% for late payment of tax due PROPERTY TRANSFER TAX (PTT):
per month. The return should be filed 6 months after the Any transfer of immovable assets attracts PTT; this in-
fiscal year end. cludes transfer of intellectual property, land, mining rights/
interest in mining rights as well as shares at a favourable
SKILLS DEVELOPMENT LEVY (SDL): rate of 5% and 10% for mining rights. This is a final tax.
This provides for the imposition, payment and collection Issuance of new shares does not attract any tax.
of SDL at a rate of 0.5% of gross emoluments; and to
provide for matters connected with, or incidental to, the WITH HOLDING TAX (WHT):
foregoing. This is liable on the employer and not the em- Zambia is not an island in trade, therefore there has been
ployee. an increase in double taxation treaties (DTT) with vari-
ous countries, and currently Zambia has DTT’s with 22
VALUE ADDED TAX (VAT): countries. These treaties help reduce WHT tax rates for
This is 16% on goods and services; the tax is borne by transactions like dividends, Interest payments, manage-
the final consumer. A company may claim VAT incurred ment fees, commissions. If no treaty is in place the rate for
in purchases within 3 months of the invoice being issued. WHT is mostly 20%.

EXPORT OF GOODS: TRANSFER PRICING REGULATIONS:

These are zero rated for VAT purposes and purchases It is international practice that related parties are treated
directly incurred may be recovered as input VAT. the same as unrelated parties i.e. transactions must be at
arm’s length to avoid profit shifting. In Zambia the disclo-
CUSTOMS AND EXCISE DUTY: sure of related partied has always been required. How-
Duty drawback is an export program that enables local ever, starting 1st January, 2018, all companies whose
manufacturers to get back any taxes incurred on goods turnover exceeds K20m or $2m should have transfer
produced for export. In order not to impede exports, Zam- pricing documentation in place. ZRA’s audit function will
bia has duty drawback schemes. It is possible to manufac- work to address base erosion and profit shifting (BEPS).
ture in a bonded warehouse. The duty draw back system
avoids double taxation. The scheme benefits exporters PERSONAL INCOME TAX:
by; reducing the export price thereby increasing the Individuals and sole traders are liable for personal tax.
competitiveness of local products on the local market. Each individual must also submit a return. This return
This scheme gives investors a very enabling environment should disclose all income earned i.e. dividends, rental in-
that would avoid over-taxing. This encourages manufac- come and other income earned in a year and tax payable
turing companies to invest in the country as most taxes if any. For an individual to be taxed they must be resident
incurred on import of most raw materials are refunded on in Zambia. Zambia uses a source-based system of taxa-
export. tion. All income earned by an individual globally as a result
CAPITAL GAINS TAX: of work carried out in Zambia should be taxed regardless
There is currently no capital gains tax in Zambia. There- of where/how they receive the payment. An individual
fore, any gain in an investment is fully enjoyed by the in- may not be taxed in Zambia. If the individual is in Zambia
vestor. for less than 183 days in a charge year i.e. the individual
 ACCOUNTANCY ANALYSIS 215

is not resident in Zambia. Under the PAYE system, the gross emoluments on a monthly basis. Late contributions
obligation is on the employer to withhold taxes from the to NAPSA attract a penalty of 20% per month. For em-
employee’s emoluments and pay these to ZRA. This is ployees getting K17,892.16 or more there is a restriction
graduated at 0%, 25%, 30% and 37.5%. on the contribution of K1,789.224. Workers Compensa-
Cash benefits paid in the form of allowances are taxable tion Control Fund is compensation that an employer is
on the employee under PAYE. education, housing/set- obliged by law to pay to workers or their families, when
tling allowance, entertainment allowance, transport/fuel, such workers are Injured or killed as a result of an acci-
commuted car allowance; electricity, telephone and wa- dent arising in the course of their employment; or when
ter bills, Allowances paid in recognition of an employee’s they suffer from certain scheduled diseases caused by
professional qualifications, and club membership fees. the workers’ particular trade or occupation. Companies
with more than 5 employees should be registered for this
BELOW ARE EXPENSES THAT ARE EXEMPT scheme and pay at rates according to industry.
FROM TAX:
• Ex – Gratia Payments REGISTRATION OF COMPANIES REQUIREMENTS:
• Medical & Funeral Expenses The minimum share capital requirement with the com-
• Sitting Allowances for Councillors pany registrar is K15,000. Secretary and minimum of two
• Labour Day Awards. Pension Benefits and Gratuity directors; 50% resident.

NATIONAL PENSION SCHEME AUTHORITY (NAP- OTHER MATTERS:

SA): Most capital equipment attracts customs duty of 0% to
This is a compulsory national social security scheme 5% on imports. Manufacturing activities in a multi-facility
even for expatriates and casual workers. The employer -zone, rural area or Industrial parks are highly incentivised.
and employee are each required to contribute 5% of the
216 TAX INTERVIEW

Feeling Confident
Shuko Ndhlovu, Partner, HLB Reliance Zambia

BRIG: There is a strong focus on stimulating BRIG: As one of the recognised accounting firms in
Zambia’s economy through the diversification of its the country, HLB must be bullish on Zambia’s future?
main sectors and the deepening and supporting Zam-
bia’s industrialisation capacity. How do you evaluate Shuko Ndhlovu:
the outlook for Zambia and Government’s efforts to One can feel the momentum on the whole continent
stimulate the economy? of Africa. There is a lot of positivity in terms of the
growth of the markets. The three signs that sustain
Shuko Ndhlovu: my optimism about the future of Zambia are that po-
The outlook is currently becoming positive, and we litical risks continue to be low, the currency exchange
are heading to “awesomeness”, if you can put it in rates and inflation rate have been stable in recent
non-economic terms. The outlook is fantastic and year. We work with multiple foreign enterprises and
entrepreneurs feel the upturn currently in Zambia’s we see how these indicators have positively affected
economy. their interest in investing in Zambia.

BRIG: Can you give us an overview of HLB and its BRIG: How would you evaluate the current tax frame-
activities? work and how can the tax framework in Zambia be
modified to attract more investment?
Shuko Ndhlovu:
HLB was born out of the UK and we belong to a forum Shuko Ndhlovu:
of firms which are governed by the same principles I rate the tax framework as fair, however we are cur-
and use the same processes. We offer traditional rently over-taxed in Zambia. There should be more
professional services - a full range of accounting & awareness in the market for double taxation and the
payroll, auditing, taxation, consulting & advisory, Cor- existing treaties. It happens that companies are taxed
porate financing, company formation and corporates both in their home country and in Zambia as they
social responsibility, along with our first class client are not aware of limited-defered deductibles. In my
service offering. We assist the investor from the mo- opinion, we are overregulated, especially in terms of
ment they touch down in Zambia until they establish withholding tax as it should be deducted from com-
their offices here in the Country. panies operating expenses at the end of the year
 ACCOUNTANCY INTERVIEW 217

and not monthly. This way, one is taxed regardless of service some of the industry heavy-weights. Being
whether they make a profit or a loss. Tax is supposed part of an established and international structure has
to be deducted from taxable profits and that should given the client confidence and the belief that we can
be modified to attract more investment. VAT and with- assist global clients, which we have been with since
holding tax is taxed at source. It does not depend on their inception in Zambia.
individual cases and net position.
BRIG: What are the main challenges that a foreign
BRIG: How has the focus on transparency affected investor experiences when establishing in Zambia?
financial reporting?
Shuko Ndhlovu:
Shuko Ndhlovu: The Zambia Development Agency should be able
In my opinion it has changed quite a lot, especially to become more of a one-stop shop and establish
for our foreign companies. The auditor previously was stronger links to Immigration and the Ministry of Fi-
viewed as the enemy previously, however, now trans- nance, as the main challenges that arise are tax- and
parency has become a necessary evil. The more immigration-related. If a foreign company has been
one’s accounting practices are looked at, the more given incentives ZDA should have a direct link to the
confidence one earns – both from clients, authorities tax authorities and assist each company that invests
and business partners. You see a lot of effort from the in Zambia. All investors should have investment-pro-
banks, the Government and private sector in terms of tection agreements signed to protect their investment
corporate governance. Also, when it comes to trans- here in the country.
parency in the market in general terms, the Stock Ex-
change has made a positive contribution as it ensures BRIG: How can the Government make Zambia more
more transparency to the shareholders. My advice competitive globally?
to the investors - when looking at a company and its
financials one should evaluate its working capital cy- Shuko Ndhlovu:
cle more than just paying attention to their profits or I think that businesses are Over-regulated and over-
analyse the cash flow before the EBITDA. taxed, so the government should harmonise tax to
make Zambia more competitive globally.
BRIG: What are the figures and the milestones that
best portray HLB’s success? BRIG: What should international investors know
when looking to expand their portfolio in Zambia and
Shuko Ndhlovu: do you have a final message to international Inves-
We started with $2,000 and we are hitting $1m turno- tors?
ver very soon. Another milestone we are planning is
to go international. We are preparing to enter the Ma- Shuko Ndhlovu:
lawi market and have just established in Botswana. It is imperative to understand the tax framework and
HLB wants to be a truly regional player and take full take advantage of double taxation agreements. Sec-
advantage of COMESA. ondly, immigration issues are very important to take in
to consideration when investing in Zambia and open-
BRIG: How ready are you to work with the Foreign ing operations here.
investor in Zambia? Looking to the intermediate future, the potential lies
within the commodities sector and clean energy.
Shuko Ndhlovu: Zambia has a growing commodities-exchange mar-
Our vision was to become a part of an international ket and I feel, will have a lot of opportunities in the fu-
network and we have achieved that. We already ture in agriculture, mining and solar and wind energy.
218

Maano alazwa amukasuumba. (Chitonga)

Wisdom can even come from a small anthill.
No person has a monopoly on knowledge or wisdom.
LEGAL FRAMEWORK
New constitution of Zambia of 2016 is an investor-friendly policy

Steps to adapt legislation to serve economic-growth agenda under-

way
220 LEGAL ANALYSIS

Legally Speaking
The Legal Aspect of Doing Business in Zambia
DEFINITIONS OF FOREIGN CORPORATION: STATUTE:
The Companies Act defines a foreign company • Company limited by shares
as a body corporate formed outside Zambia but is • Company limited by guarantee
registered in Zambia under the Act. However, a for- • Branch of a foreign company
eign corporation does not necessarily have to be • Unlimited liability company
registered in Zambia in order to undertake once off • Statutory corporations
business transactions in the country. In practice, • Sole proprietors trading under Business Names
companies incorporated or formed outside Zambia societies generally
may do business in Zambia remotely, that is, with- •Co-operative societies.
out any presence or form of registration in Zambia.
However, the law requires a foreign company to ap- COMMON LAW :
ply for registration as a foreign company within 28 • Agencies, licensees and distributors;
days of setting up or acquiring a place of business • Partnerships;
in Zambia. • Trusts; and
• Franchises.
DEFINITION OF DOING BUSINESS IN ZAMBIA:
A person may do business in Zambia by formally
establishing one of the enterprises listed below, or SOURCE BASED SYSTEM OF TAXATION:
informally without one. Generally, doing business Zambia principally operates a source-based sys-
can be said to refer to undertaking commercial activ- tem of taxation, and any income that is deemed to be
ities in Zambia for profit and it gives rise to registra- from a source within Zambia will fall within the scope
tion, licensing and taxation consequences. These of taxation in Zambia.
requirements may differ depending on the particular Generally, income will be deemed to arise from a
economic sector that the business is engaged in. source in Zambia if the capital or skills used to gen-
For instance, the licensing regime applicable to the erate the income are employed in Zambia.
mining sector differs from that of the energy sector. The instances when income will be deemed to be

The next two sections detail theforms of enterprise

may be established under statute and common law
for purposes of doing business.
 LEGAL ANALYSIS 221

from a source in Zambia principally include the the nature of the entity or its business activities, this
following: rate may vary. For instance, public limited compa-
(i) when skills, labor and capital used to earn the nies listed on the Lusaka Stock Exchange enjoy a
income are employed in Zambia; preferential tax regime, and mining companies are
(ii) when an agreement for the sale of goods is subject to an income tax rate of 30%. Further, al-
executed in Zambia; though electronic communication businesses pay
(iii) when the income earned arises from employ- income tax at a rate of 35% for the first K250m that
ment exercised or duties performed in Zambia; or they earn, income tax is payable at a rate of 40% for
(iv) when the income arises from the carrying on of taxable income that they earn above K250m .
business in Zambia.
In addition to the source of income, the permanent VALUE ADDED TAX VALUE ADDED TAX (VAT):
establishment (PE) rules may be used to deter- is payable at a standard rate of 16%. However, cer-
mine whether a business has a source of income tain supplies are zero rated or exempt from VAT. For
in Zambia will be liable to income tax on the profits example the supply of certain food and agriculture
derived from the PE. The definition of PE includes products including uncooked, frozen or dried fish
a branch, office, workshop and place of extraction and fresh edible fruits and vegetables are exempt
or exploitation of natural resources. from VAT; and the export of goods from Zambia may
The tax residence of a person widens the scope of be exempt from VAT if the relevant documentation is
taxation when a person is resident in Zambia then, provided. It is noteworthy that the importation of ser-
in addition to business income, such person will vices into Zambia is subject to Reverse VAT (RVAT).
also be liable to Zambian income tax on interest RVAT is a transfer of liability to account for and pay
and dividend income from a source outside the VAT on imported services from the person making
Republic. the supply (the supplier) to the person receiving the
An individual is regarded as being resident in supply (the recipient). Where VAT reverse charge is
Zambia if he is present in Zambia with the intent of levied, the importer has no input VAT claim unless
establishing his residence in Zambia. Further, an the service provider appoints a tax agent.
individual is regarded as being resident in Zambia
if he has resided in Zambia at one time or several WITHHOLDING TAX:
times for one hundred and eighty-three days in a Generally, dividends and interest payments are
year. A company is resident in Zambia if it is incor- subject to withholding tax at a rate of 15%. However,
porated or formed under the Laws of Zambia. A the rate of withholding tax is 0% for dividends paid
company may also be regarded as being resident to individuals by a company listed on the Lusaka
in Zambia if its central management and control is Stock Exchange. Further, management or con-
based in sultancy fees and royalties paid to residents and
Zambia. non-residents are subject to withholding tax rates
of 15% and 20% respectively. In addition the with-
Taxable income: holding tax rate for rental payments from a source
A company’s or a branch’s taxable income is within Zambia is 10%. Although a tax treaty may
based on its financial statements prepared for an reduce the above rates, this is subject to the issu-
accounting period as adjusted for tax purposes. ance of a Limited Deduction Direction by the Zambia
Any expenditure, other than expenditure of a capi- Revenue Authority. Zambia has double tax treaties
tal nature, which is incurred wholly and exclusive- with Botswana, Canada, China, Denmark, Finland,
ly for the purposes of the business in the relevant France, Germany, India, Ireland, Italy, Japan, Ken-
accounting period is generally deductible. ya, Mauritius, Netherlands, Norway, Seychelles,
South Africa, Sweden, Switzerland, Tanzania,
TAX RATES Uganda, the United Kingdom and Zimbabwe.

CORPORATE INCOME:
Tax Generally, there is no distinction between the
treatment of companies and branches for income
tax purposes. They are both subject to a corporate
income tax rate of 35%. However, depending on
222 LEGAL ANALYSIS

MINERAL ROYALTY:
The mineral royalty rate ranges between 4% and 6% tive offices, both branches and companies require
and it takes account of the prevailing copper price. a registered address. In addition branches require
The following mineral royalty rates apply where the a documentary agent in Zambia. Although there is
base metal produced or recoverable under a license no requirement for a branch or a company to have
is not copper: employees in Zambia, a branch must have one lo-
(a) 5% of the norm value of the base metals pro- cal director and more than half of the directors of
duced or recoverable under the licence. a company should be resident in Zambia. Further,
(b) 5% of the gross value of the energy and indus- although a company should have a company secre-
trial minerals produced or recoverable under the tary, a branch need not have one.
licence.
(c) 6% the gross value of the gemstones produced LICENSING REQUIREMENTS (GENERAL)
or recoverable under the licence. The operation of certain businesses may require
(d) 6% of the norm value of precious metals pro- licenses and/or permits from one or more regulatory
duced or recoverable under the licence. authorities depending on the particular economic
sector in which the business operates. Economic
The following mineral royalty rates apply where the sectors in Zambia include mining, agribusiness, en-
base metal produced or recoverable under license ergy, tourism, telecommunications, infrastructure,
is copper: financial services and professional services.
(a) 4% of the norm value when the norm price of cop-
per is less than $4,500 per ton. Generally, establishing a business in Zambia
(b) 5% of the norm value, when the norm price of involves the following licensing/permitting issues:
copper is $4,500 per ton or greater but less than
$6,000 per ton; and • Reserving a unique business name at the Patents
(c) 6% of the norm value, when the norm price of and Companies Registration Agency (“PACRA”),
copper is $6,000 per ton or greater. • Opening a bank account,
• Registering the company at PACRA,
ESTABLISHING LOCAL REPRESENTATIVE OF- • Registering for taxes with the zra, including value
FICES, SUBSIDIARIES: added tax (“vat”) and pay as you earn (“paye”)
The incorporation of a company, or the registration registration, and obtaining a tax payer’s
of a foreign company or a business name, is effect- identification number ,
ed through the Companies Registry at the Patents • Registering with the national pension scheme
and Companies Registration Agency (PACRA). authority for employee social security purposes,
A company incorporated in Zambia is liable to tax • Registering the business with the workers
on interest and dividends from foreign sources, as compensation control board,
well as on all income arising in Zambia. A branch, • Obtaining a sector specific licence if the
like a company, is also liable to tax on all its Zambian business will operated in an economic sector
sourced income, and on foreign interest and foreign subject to mandatory licensing requirements,
dividends received by the branch. • Obtaining a trading license and a fire cetificate
Regarding statutory and accounting obligations, a from the local council.
foreign branch is treated as if it were an independ-
ent resident company. It is required to maintain all FORMING JOINT VENTURES:
books of accounts locally, and it is also required to Joint ventures are formed pursuant to a Joint Ven-
prepare and file accounts that should be audited. ture Agreement (JVA) which sets out the terms of the
A foreign branch is also required to submit annual joint venture relationship. It is possible to establish
tax returns and computations based on its audited an unincorporated joint venture or an incorporated
financial statements. joint venture in which case the parties to the JVA
From a tax perspective, a branch and a com- may decide to form a joint venture company.
pany are also treated similarly. The same applies A joint venture may constitute a notifiable merger.
regarding the repatriation of profits. Although The Competition Act, in relation to mergers, pro-
a branch, unlike a company, does not pay divi- vides that a merger is a transaction between two or
dends, it is subject to withholding tax at a rate of more independent parties in which the parties agree
15% on the repatriation of surplus funds. This to adopt arrangements for the common ownership
is the same rate at which dividends are taxed. or control over the whole or part of their respective
Regarding the establishment of local representa- businesses. This acquired interest may be through
 LEGAL ANALYSIS 223

FLOW OF GOODS AND SERVICES:

an agreement to work together in a joint venture, Zambia’s main export commodities include copper,
and it may prevent the ability of a party to make cobalt, agricultural products such as tobacco, fresh
independent business decisions on its operations. flowers, and cotton, electricity, and hardwood. Its
Therefore, if companies seek to form a joint venture main imports include capital goods, chemical prod-
the approval of the Competition Commission may ucts, crude oil, fertilizers, petroleum products and
have to be obtained. Where the acquired interest raw materials.
does not materially influence the decisions of the Generally, goods and services are allowed to flow
acquired party and the joint venture is created to freely in and out of the country subject to payment of
merely support the business of the parties, this is taxes. However, certain sector-specific restrictions
less likely to give rise to a notifiable merger. may be imposed from time to time. For example, in
the interest of food security, a ban on maize exports
may be imposed, maize being the country’s stable
food; and, in an effort to curb deforestation, the Gov-
FLOW OF CAPITAL: ernment may introduce export bans on timber
There are no exchange controls applicable. The species.
exchange rates are determined entirely by market
forces of supply and demand for foreign currency
and there are no restrictions on externalising profits,
dividends or royalties. However, certain over-the-
counter cash dealings in foreign exchange are limit-
ed in amount per transaction per day. There are also
limits on local currency electronic funds transfers
(EFTs) that can be undertaken at a time. However,
these limitations do not apply to foreign currency
EFTs.
224 LEGAL INTERVIEW

Steps Towards Growing a Viable Economy

Charles Mkokweza, Partner, Corpus Legal Practitioners

BRIG: There is a strong focus on the stimulation of

Zambia’s economy through the diversification of its
main sectors and the deepening and support of Zam-
bia’s industrialisation capacity. How do you evaluate
the outlook for Zambia and the Government’s efforts
to stimulate the economy?

Charles Mkokweza:
Historically, the mining sector has been the dominant tor to grow. Zambia has recorded interest from many
sector of the economy as 70% of the foreign exchange global players enquiring about the investment oppor-
is generated by mining activities. Although, the dis- tunities in the energy and the agriculture sectors. We
cussion about diversifying the economy always has do see high growth potential in the tourism sector as
been present in the political circles, one did not see new tourism infrastructure is created. Zambia is up-
any developments toward practical implementation. grading its international airports and building a green-
The current administration has taken tangible steps in field airport in The Copperbelt to serve both Tourism
trying to create viable policy and introduce the neces- and mining sectors.
sary changes in the legislation. The tax regulations
are the first indicator of diversification and there have BRIG: What can Zambia do to attract more foreign
been interesting amendments done recently. Govern- investment in the country?
ment has enhanced the agricultural Credits Act, a
crucial financing instrument for the agricultural sector, Charles Mkokweza:
one of the Government priority areas. Now, movables There are several risks investors should consider
can be secured under the new Movable Properties before investing in a certain market. Many of the fi-
(Security Interest) Act as a key supplement to the ag- nancial risks are controlled by the Government, espe-
ricultural Credits Act. I have also seen a drive towards cially the taxation. I think that the tax system in Zam-
strengthening the laws that regulate the financial sec- bia would be much more stable if we would tax every
tor through the new Banking and Financial Services sector differently. Regulatory risks should also be
Act and the new Securities Act. considered. The public sector should organize con-
The energy sector has seen many recent regulatory sultations with the private sector on a more regular
developments and positive policy shifts, as the gov- basis to stay informed of their needs and implement
ernment is introducing cost-reflective electricity tariffs the policy accordingly. Also, the market risks gener-
by removing subsidies. ated locally or internationally have a huge impact both
In my opinion, Government is, rightly stepping back on the decision to invest or to continue investing and
from its efforts to subsidise the supply toward subsi- the Government needs to understand how it can as-
dising the production and, therefore, allowing the sec- sist the priority investor community
 LEGAL INTERVIEW 225

BRIG: What are the main challenges that a

foreign investor experieznces when establishing in-
Zambia?

Charles Mkokweza:
mitigate them. I find the policy and regulatory frame- Regulatory requirements can be costly to the investor
work satisfactory. Predictability of policy framework and often, there are complex but seemingly low-risk
is mandatory for any economy to grow. The new con- problems that are hard to predict as the parameters
stitution of Zambia, which came into effect in 2016 is are not well defined. There will be times when bu-
an investor-friendly policy and, although not perfect, is reaucracy will slow down the processes due to a slug-
innovative and encourages innovation itself. gish implementation on the Government side. Due to
Secondly, I feel that the current Government is com- a mild form of indigenisation, obtaining work permits
petent and very business-oriented with long-term in Zambia has also become a somewhat challeng-
planning in place. By removing the electricity and the ing process because of the reluctance of the Govern-
petroleum products subsidies it has demonstrated ment to issue such where Government considers the
serious commitment to the development of the econ- local labour market is threatened. Although aimed at
omy; there is consistency of policy and its implemen- protecting the local employee, the strict regulations
tation. do not serve the market as Zambia does not gener-
Thirdly, Zambia is currently experiencing a rise in the ally have the right set of skills just yet. Zambia also
entrepreneurial society. People from all strata and needs to build a local investor community, however,
across all age groups are keen to choose the path of the lending rates are high and does not encourage
entrepreneurship. However, several challenges per- an active participation from homegrown companies.
sist. As a country, we have not paid attention to our
knowledge economy. In general, we are not as com-
petitive as we should be in terms of qualified work-
force or education levels when measured against
international standards to enable our local people to
become the drivers of the economy.
226

Sibbuzya takolwi bowa (Chitonga)

He who asks cannot be killed by a mushroom.
People who ask about things they do not know often avoid
problems.
THE ENTERTAINMENT GUIDE
228 EXPAT GUIDE

Zambia Expat Guide

On a Lighter Note
There are really few dangers, but the most likely be far easier than changing schools in their home
one to the organisation would be that you lose country.
him or her to Zambia at the end of their contract
if you cannot provide a far superior opportunity MEDICAL:
elsewhere. In any group of people who were not This is possibly the most important risk to under-
born in Zambia you will hear stories of folk who stand. While Zambia’s medical resources are im-
came here for two years 30 years ago. Those proving daily, there are still certain circumstances
who have been here for two years are looking for where immediate evacuation to South Africa is
contract extensions or other opportunities. Cor- needed. These would mainly be under emergen-
porates need to consider their succession plans cy conditions, particularly in the case of trauma.
when assigning someone from their home coun- The good news is that there is a network of highly
try. One can understand the need for a few expats trained emergency response teams that can co-
to ensure that the company-culture, processes ordinate recovery from remote areas all the way
and procedures are implemented correctly, just be through to South Africa or any other destination.
prepared to lose those people if you want to repat- Most international medical aids are recognised in
riate them sooner than they want to return. Zambia and there is comprehensive medical in-
So what does the expat need to know before they surance available in country, which will make all
head to Zambia? logistical arrangements for the patient 24/7. Where
the medical aid provided by the company does not
EXPAT GUIDE FROM A TO ZED provide repatriation, Medical insurance can miti-
gate any risk of massive repatriation costs. Malar-
SCHOOLS: ia needs to be considered. Take medical advice,
If there is a desire to keep the family together, then but most people only use physical prevention. It
schooling is not a reason to leave the kids behind. is unlikely to occur in Lusaka, but there are other
Most expat packages would include schooling and places where it can be contracted. If you pick up
the institutions in Zambia turn out students that fit symptoms early enough, testing is quick and ac-
straight into universities all over the world and curate and the prescribe medicine works quickly
go on to achieve significant academic success. and down time is minimal. Once diagnosed and
One can generally find a suitable curriculum for a treatment has begun, recovery progress is visible.
seamless transition in and out of Zambia. British,
American, Italian, Chinese and other international SPORT:
schools are able to provide parents with peace Zambia is not just about football, even though it
of mind in this regard. Most scholars have been is the sport that carries the flag and the Nation’s
the ‘new kid’, so they are most welcoming to new hopes. Zambian residents compete success-
comers. Making friends and fitting in is likely to fully at international level in many sports. These
 EXPAT GUIDE 229

include polo, lacrosse, rally, moto-x, enduro, such as beer fests, wine tastings, live local and
swimming, boxing, athletics, body building, rug- international music performances. Established
by, sevens, chess and many more. By joining a eating venues will also feature live entertainment
sport even as beginners, the family will broaden from time to time and you will see familiar faces
its circle of friends, contacts and support imme- supporting these. Most Expat houses are enter-
diately. While some sports were once supported tainment friendly, so you will be invited to many
by specific sectors of society, this is changing with informal functions that are generally in the form of
Zambia’s growing middle class and they are com- braai’s (proper BBQ’s) or cuisine from the host’s
ing to reflect the broader society. home country. With internet being expensive,
there is a limited choice of satellite subscription
WILD LIFE: stations. If you are a fan of American sports, you
For the Expat, it would be remiss not to experi- are unlikely to be able to track your team live, oth-
ence once-in-a-lifetime visits to Zambia’s game er than on the internet.
parks. For residents, rates can be very reasonable
and one can get to see the big five in one’s own DINING:
vehicle without being mobbed by safari tourist ve- Visiting pubs and eating out is probably the most
hicles. There are massive migrations from bats common entertainment activity. Lusaka, in particu-
to zebra and antelope. Once the big five become lar has its fair share of excellent options. Most of
mundane, a whole new world opens up. Birding the popular restaurants cover a range of dishes on
and the discovery of Zambia’s plethora of smaller their menu to cater for all nationalities. Many focus
animals, reptiles and insects awaits. A visit to Liv- on a particular cuisine, but still have the normal
ingstone is mandatory and will probably be one options such as steak and pasta. For international
of many. New Year is a great time there for the visitors, waitron service may sometimes seem to
younger generation and it is certainly the adren- be lower than expectation, but remember, in other
alin capital of the region. Don’t miss the Victoria parts of the world, waitrons are drawn from univer-
Falls. Spend as long as you can spare taking in sity students (or actors) who have grown up eating
the magnificence of seeing them in person. Zam- at restaurants and understand how they want to
bia is home to numerous other spectacular water- be treated. Many Zambian waitrons first experi-
falls that are hidden gems and many of these are ence restaurant life from their side of the table.
accessible to the more experienced traveller and The Zambian’s advantage is that they really do
well worth the road trip. want to please you and can be visibility distraught
if they fail. Hold off that ‘first world’ indignation and
CULTURE: you will have a great evening. Generally, you get
Traditional ceremonies provide a window into a good, honest plate of food, the best meat in the
Zambia’s culture. They are colourful, entertaining, world, crisp vibrantly-coloured vegetables and as
educational and worth attending. Some are more Zambia is so fertile, the food on your plate is often,
commercialised and geared to tourists or you can by default, organic.
ask your Zambian colleagues which are important
to them and attend some of those if you are able TRAFFIC:
to handle the logistics. There are cultural villag- Peak hour traffic in Lusaka can be as bad as any-
es, museums and monuments to discover. While where in the world and this may be compounded
Zambia has not focused on post-independence by even a bumper-bashing. Zambians are polite in
history, this is changing and initiatives like the normal traffic. They will let others in who do push
Freedom Trail will chronical Zambia’s support of in from emergency lanes. Watch out for the last
her neighbours’ struggles for independence. few cars coming through on the red and for some-
one who may hit you from behind if you do want to
ENTERTAINMENT: stop when you see the orange. Zambians use their
For those with some extra cash there is no short- indicators to communicate with other road users.
age of casinos where you can return it into cir- Do not assume they are indicating a turn. Hazard
culation. Some claim to have high pay-out rates, lights are not just used in emergencies, they are
but they are in it for profit and do provide a fix for often used as supplementary brake lights. When
those who enjoy the ambiance of such establish- something abnormal has happened on the road,
ments. We have a few cinemas that are in sync the average road user would be calm for about 5
with South African releases, a play house that fea- minutes. After that it becomes everyone for him-
tures local performances and numerous events self. Gridlock ensues. Just lean back and watch it
230 EXPAT GUIDE

untangle. Phone ahead and chill. Speeds on most 6pm. Even national and international events can
Zambian roads are low, this means that many ac- be called off. One can apply for exemption, but
cidents do not involve serious injury. Some de- generally there would be a postponement. Also,
lays are caused by frequent police road blocks. organisers will choose not to hold events even
Just make sure that your licences are up to date after 6pm. The Expat manager will find that staff
and your vehicle is road worthy and you will be tend to take more time off to attend funerals than
OK. If you are pulled over for speeding unfairly, in other countries and funeral processions do not
and if you stand your ground respectfully, you are enjoy any additional legal rights in terms of rules
unlikely to be fined. At regular stops, the officers of the road, however it is best to pull out of the way
will get to know you and even stop you just to ask and let them pass.
about your family if they have been away for a
while. Traffic is the most common excuse used for RELIGION:
folk who arrive late to meetings and functions, and Zambia is a Conservative-Christian nation. Most
while it can mostly be factored in, there are unex- denominations are well represented here and one
pected delays. can generally find a place of worship to suit you.
Having said that, Zambia is tolerant of all other re-
RULES OF THE ROAD: ligions and friction is virtually unheard of and other
If you see fresh branches on the road, slow down. religions are free to practice unhindered. Freedom
There is a good chance there is a broken down ve- of association in all its forms spreads far and wide,
hicle in the road ahead. Even old branches could however homosexual acts are illegal and do at-
be a sign that the vehicle has been there a while. tract criminal charges. Many functions are opened
While triangles are mandatory, they are seldom and closed with prayer which is generally led by
used as they can be stolen while the driver sleeps a lay preacher in the group. This will be the case
and he can be fined if he does not have them at during occasions such as training sessions and
the next road block. Do not move your vehicle or Union negotiations.
drive away even for the slightest bumper-bashing
and report any accident immediately. Don’t be of- CLIMATE:
fended if you report an incident and are promptly For most expats, Zambia has an endless summer.
fined for careless driving. That is the way the laws Temperatures are warm to hot and even in win-
are written and you need the police report for ter they do not drop anywhere near to freezing.
an insurance claim. If you come across an acci- Around August and September there can be some
dent, you are required to stop and assist. Another wind, but in general days are balmy and wind-
unique practice is that if you splash mud on a pe- less. There are two weeks in October, just before
destrian, you are liable to clean their clothes and the rains, when humidity and temperatures rise.
things can get unexpectedly heated. On that topic, Dubbed suicide month, some joke about sending
slow down when you pass pedestrians on a dust their wives home for the period. As the rains break
road. It’s not fair to cover them in dust when they towards the end of October, this is relieved, the
have long distances to walk. Blue lights. If there is trees are washed clean and spectacular greens
an official convoy, you are expected to pull over are visible. The earthy smells that wash over you
and stop immediately. Do so. It will not take long. as the parched earth soaks up the water are a
Sometimes traffic will come to a complete stop for sign that the drought is broken and the vegetation
ages. Switch off your engine, there is a blue light is going to burst into life. As the rains continue to
convoy heading your way and the road has been fall, some dirt roads can become impassable to
cleared by officers posted at each cross road. normal sedans for a while. By the end of March,
the last rains are falling and muddy roads are
MOURNING: claimed back by dust.
Zambians take death very seriously. With the
passing of so many Presidents in quick succes- SECURITY:
sion, the practices around honouring important While there are many security estates and high
people have been established. When a period walls in the suburbs, they are not really justified
of mourning is declared, there is technically no by current crime levels and originate in the seven-
entertainment or sport takes place from 6am to ties and expats’ unjustified fear of the unknown.
 EXPAT GUIDE 231

In certain high density suburbs, it makes sense calities in the paperwork to slow things down. It’s
to keep doors locked when you are away and to not that they need to bribe anyone, approved con-
have minimal security precautions to prevent op- sultancy is a natural career path for Government
portunistic theft. Violent crime is virtually unheard officials and so they are happy to support the in-
of and makes headlines, unlike places like South dustry and encourage its growth. The consultancy
Africa where it is a way of life. There are a few fees are reasonable and certainly worthwhile in
places in Lusaka where it pays to lock your car terms of time and money savings. Things start to
doors while driving to prevent a quick grab. If you get grey when one is offered quicker service for a
do fall victim, it is not unheard of for pedestrians ‘tip’. You have to comply with all the legalities, but
to assist you. You do not need security guards as the wheels grind faster for a relatively small fee.
a rule. They are generally not well paid and can This is still illegal, so be aware that there could be
be tempted themselves. As with anywhere in the dire consequences. Pure high-level corruption as
world, if you treat your staff fairly and with respect, a short-term fix may work. You may tempt or be
you can go decades without incident. The further extorted, however, the traces will remain and with
you stay out of town, the less likely you are even a change of administration, you may be caught up
to suffer petty theft. Your chances of dying for your in the aftermath.
Nikes in Zambia are remote.
SHOPPING:
VEHICLES: With the recent burgeoning of shopping malls in
If you stay in town and your main routes are on Lusaka and other major centres, there is no short-
tar, then you can get away with relatively cheap age of South African retail chains. From food to
grey imports in the Corolla range or smaller. Spare hardware, home accessories, furniture and cloth-
parts are readily available and local mechanics ing, most needs are covered. Combining shopping
can keep them on the road cheaply. A step up trips with business trips to SA is no longer neces-
would be the German marques like the C-Series sary. Any specialised products are available off
which are becoming popular with the middle class. the internet with Zambian-based companies offer-
Many corporates may have a policy against grey ing consolidation from delivery points in the UK,
imports, in which case most of the recognised China, USA and South Africa. Full payment can be
brands are represented. With import duty, this can arranged for transport in Zambia. Fresh meat and
be a very expensive policy. You cannot get much vegetables are readily available locally and are of
luxury for $50,000. Generally you will be wanting superior quality. Much of the fresh fruit is imported
the main vehicle to have 4x4 options and be in and of high quality.
excess of 2.5 L. Fuel quality is low, so more basic
fuel systems are preferred and any modifications ACCOMMODATION:
should include suspension. Stick to high quality If one is expecting standards similar to those in
tyres, although second hand imports are avail- the home country, rentals can be expensive. This
able, one does not want to deal with a blow-out would normally be paid for directly by the compa-
in an inaccessible place. Fuel cards are available, ny. There is a mix of colonial-era housing and new
but travel with cash in case the card machines are developments and most tastes and standards can
down. be met. In Lusaka, many suburbs are supplied
with water by the council, however most residenc-
CORRUPTION: es have access to borehole waterthat, while hav-
It would be remiss not to include this topic. Cor- ing a high lime content, is delicious and there is no
ruption is a problem in all countries, but it is im- need to rely on bottled water. Where the suburb is
portant to note that in Zambia, someone with strict on the electricity grid with prepaid meters, most
anti-corruption principles is able to stand in the houses will still have backup sources such as
long queues and do everything by the book. Fol- inverters or generators. Some areas have water-
low the outlined procedures and you will prevail. borne sewage, but mostly septic tanks handle the
Your next option is to employ a consultant. Gener- effluent. High speed internet is being rolled out,
ally these are people who used to work in the vari- but this is still expensive and can be unreliable.
ous structures and know the system and the right Fixed line telephone lines are available, but with
people. They will ensure that there are no techni- prepaid vouchers available on every street corner,
232 EXPAT GUIDE

cellular phones are the dominant means of com- tions make it easier to do business in unbanked
munication. rural Zambia. Apps that arrange home delivery of
food seamlessly from numerous restaurants have
ZED IS FOR ZAMBIA AND ZAMGLISH: sprung up and are working well for both consumer
Zed is the nickname for Zambia and there are and restaurant.
many local idiosyncrasies waiting to be discov-
ered. Pipo = People. Sleepers = slippers and SERVICES:
Railway sleepers = slippers. Sku = school. Braii Most services are available in the Capital. After
= Braai (BBQ). L’s and R’s are interchanged, so a month or two, the expat will suddenly realise
your gardener may ask for groves and a lake. For- that they need a hairdresser. They then ask in a
get 2 o’ clock. In Zambia, it is 2 hours or 14 hours. panic: Is there someone who can cut my (straight)
A roof tile manufacturer has ads all over the show hair? The answer is that every single salon in the
and someone there had made up sayings that shopping centres and those professionally set up
compare not using their product to other disasters. in independent premises can cater for all types of
They are amusing in a baffling way as most make hair. Straight-haired people have been in Zambia
no sense at all. It’s not only you. Another sport you for centuries. Where more specialist hair care is
can play is to spot the spelling mistakes. They ap- needed, there will still be numerous favourites. Pet
pear anywhere. On crude hand painted signs, pro- care, veterinary services, pest control, child care,
fessional sign writing and printed ads. Some are couriers, car hire… It is just a matter of finding the
hilarious as they change the intent and others are one that suits your expectations and budget.
phonetic. It’s a pastime for when the traffic is slow.
Smart Phones. These are a way to connect in nu- BUY ZAMBIA:
merous ways. Facebook is probably the most pop- Many Zambian products stand head and shoulders
ular of the social media platform with many busi- above the imported, known, brands. The Green
nesses preferring a page to a formal website. For Tomato Chutney does not grab ones attention
the Expat, there are numerous pages to join to get on the shelf, but once visitors have tasted it, they
advice and often a simple search of the page will smuggle bottles home. Do yourself a favour and
yield results. Your query is unlikely to be the first. try some. The local washing powder, dish wash
Most sports and informal groups have a presence and soap bars really work well, they will blow your
and you can find out about your specific interests dirty socks off. Fizzy Ginger beer, apple and fruit
on them. Alternate news pages that differ from crushes have their converts. Try the international
the mainstream media exist in cyberspace with deep fried chicken, the peri-peri franchises and
FB pages and their own websites. When an issue the others that are familiar. Then watch for Thurs-
goes viral, there is often a racial element to it, but day and get a bucket of Zambia’s own chicken on
unlike most places, racism is called out no mat- special. You don’t have to be hungry to get hooked
ter who the perpetrator is. When an expat or visi- on the size, taste and value. Local popcorn and
tor exhibits a public white saviour complex, then crisps are delicious. If you like the mass produced
all Zed residents attack from across all available beers and lagers, then Zambia has its own label
platforms. See #LintonLies which raced to the top that is refreshing and thirst quenching. There is
of the hashtag listings for days in the region. Zam- no need to hold onto your SA beer label. Imported
bians are rapidly embracing applications such a ground coffee is obsolete, Zambia’s product is ex-
mobile money that allows consumers to pay for ceptional. You have taken the plunge into the real
all utilities, TV, airtime and data, with additional Africa, live dangerously and pick the product with
suppliers being added regularly. These applica- the odd looking packaging.
EXPAT GUIDE 233
234 ENTERTAINMENT GUIDE

Lusaka Entertainment Guide

What to do Here?
WILDLIFE:
The surrounding areas of Lusaka host several breakfast and lunch at the outdoor restaurant by
excellent wildlife experiences, catering to most the pool and other dining areas are available for
budgets. private functions. The small resort also houses a
Lusaka National Park, Zambia’s newest and most sizable private art collection of African contempo-
accessible park, which opened its doors to the rary paintings and sculpture and traditional arti-
public in 2015, is conveniently located roughly 20 facts acquired from all over Africa.
km from town and boasts a wide range of species Lilayi Lodge is a luxury lodge on a private game
including white rhino, giraffe, eland, impala, black reserve on the outskirts of Lusaka that also hosts
lechwe, blue wildebeest, kudu, zebra, warthog an elephant orphanage. The guests are offered
and pangolin. The small park spans 67 km² and high-end accommodation in 12 elegant and lux-
offers activities such as camping, walking safaris urious open-plan ensuite chalets with a private
and bicycle trails. veranda for wildlife viewings at the nearby wa-
The Chaminuka Lodge is a safari lodge/resort terhole. The recently re-opened Lilayi restaurant
situated about 30 minute drive from Lusaka’s air- with an Executive Chef and Sommelier offers a
port. Originally a private home, it was converted five -star equivalent dining experience blending
into a luxury lodge and opened to public in 1998. African fusion and contemporary cuisine and its
Chaminuka offers a wide range of activities in- in-house wine cellar is stocked with exclusive
cluding game drives in open 4WD vehicles led by wines to cater for all tastes. Lilayi Lodge offers
Chaminuka’s own safari guides. Game here in- game drives, guided walks and horseback safaris
cludes various species of antelope such as roan, for guests who want to view a variety of wildlife
sable, kudu, eland, bushbuck, lechwe, hartebeest including antelope, wildebeest, zebra, giraffe and
and tsessebe, as well as larger game such as the myriad bird-life. The elephant nursery cares
buffalo, giraffe, elephant and zebra. Lion and hy- for orphaned elephant calves with the intention
ena can also be seen in a separate enclosure. of rehabilitating and eventually releasing them
More than 300 species have been recorded on back into the wild. The young calves can be seen
Chaminuka’s reserve – some native to the area daily between 11:30 – 13:00 from the specially de-
and others visiting the Chaminuka wetlands dur- signed viewing platform.
ing the annual migration. The lodge also offers Kalimba Reptile Park is a great place for a fam-
cheetah walks with their resident cheetahs Chipo ily picnic, group outings and school trips. Just half
and Chaminuka, horse-riding, as well as boating an hour’s drive from Lusaka, the Reptile Park of-
and fishing on the lake. The guests are served fers its guests an opportunity to view the giant Nile
 ENTERTAINMENT GUIDE 235

crocodile and several species of iconic snakes. exquisite Indian curries in a modern setting.
The activities on offer are reptile tours, crazy
golf, fishing, volleyball, table tennis and trampo- SOUTH-EAST ASIAN CUISINE:
line. The park is owned by Kalimba farm, which Chang is the most recognised Thai restaurant in
specializes in crocodile farming and stocks such Lusaka, with a delicious menu served in an up-
treats as crocodile tail, crocodile sausages, Pe- scale setting. Mings Oriental offers its customers
king duck and similar fresh produce at the farm an eclectic mix of Asian flavours from Chinese to
shop. Thai to Indian, and a variety of Dim Sum and Si-
chuan cuisines. For an authentic and well-spiced
RESTAURANTS: Chinese experience, try Sichuan Restaurant at
A wide variety of cuisines are available throughout The Showgrounds. There is also a great Japa-
Lusaka and add to the richness of the cultural mix nese restaurant, Nippon Sushi Mai, in Rhodes
in the city. Park for those who love sushi, a rarity in a land-
locked country like Zambia. One can also find ex-
ZAMBIAN CUISINE: ceptional Korean dining opportunities at Jewel of
Matebeto restaurants line the streets of Lusaka Zambia, Kobi Food, and Arirang restaurants.
however, there are several locales that are never
empty and always beloved by their loyal clientele. PIZZA:
Twapandula in Longacres, Matebeto in Thorn- Lusaka residents and visitors cannot settle on
park and Kumushi in The Showgrounds are the which one of the pizzerias in town makes the best
Zambian restaurants favoured by young and old, pizza. Notable restaurants are Il Portico restau-
civil servants and entrepreneurs, teachers and rant on Leopards Hill Road, Rosso Trattoria at In-
accountants. One of the newest additions to the tercontinental hotel, Eataly Pizzeria in town, and
Zambian cuisine restaurants is the Chuma Grill The Orange Tree Public House in Kabulonga.
at the Radisson Blu hotel, which offers sampling In terms of Fast food: Lusaka’s offering of deli-
the local cuisine in an upmarket setting. For an cious fast food is unmet by most of its regional
inexpensive, authentic experience feasting on the neighbours. The malls here house such favourites
local delights, try Town Centre Market off Cairo as Hungry Lion, Debonairs, Pizza Hut, Nandos,
road. Galito’s, Fishaways, Steers, KFC and the local
chain Zamchick.
STEAKHOUSES:
A good steak is a dining must-have in Zambia, a SHOPPING:
supplier of premium beef products to wide geog- Lusaka, the capital city of Zambia, has recently
raphies. Horseshoe Steakhouse serves a wide seen a tremendous increase in retail space. Lu-
variety of prime steaks. You can also enjoy tasty saka has over 10 large shopping malls dispersed
buffet roasts every Sunday, perfect for the whole across the various neighbourhoods, with Manda
family. Marlin restaurant is a well-known restau- Hill, Arcades Shopping Mall (currently undergo-
rant with both international and Zambian clientele ing a major upgrade), East Park, Levy, Garden
and has built its reputation on its quality dishes, its City, Waterfalls, Makeni and Cosmopolitan malls
steaks and its modern take on Mauritian Creole among the largest. The malls host a wide variety
food. This restaurant offers a selection of classic of shops ranging from high-end boutiques, res-
dishes with a clever contemporary twist, present- taurants, supermarkets, clothing, jewellery and
ed in a friendly informal atmosphere. furniture shops, cinemas, nightclubs and banks to
hotels, casinos and service stations.
INDIAN CUISINE:
For an authentic Indian experience, look no further ART:
than Bombay Lounge, situated at the three premi- Lusaka is home to various permanent exhibitions
um shopping malls – East Park, Levy and Garden displayed in both, the state museum and several
City. With 180 items on the menu, the restaurant private art galleries scattered across the town.
offers a fine dining experience of Mangalorean Lusaka National Museum opened its doors to the
and South Indian dishes. Another great venue is public in 1998 and has a small and compact dis-
The Royal Dil, offering a scrumptious meal of play. The lower gallery is home to contemporary
236 ENTERTAINMENT GUIDE

art, highlighting the way of life of the Zambian at Protea Hotel by Marriott. The guests will find
people through paintings, sculptures, and models. the following games in Lusaka casinos: Blackjack,
The upper gallery tells a glowing story of Zambia’s Caribbean Stud Poker, Texas Hold’em, American
development, from ancient, through historic past Roulette, Electronic Roulette, among others.
to contemporary way of life. The children’s corner
is yet another display attraction on the upper floor. MUSIC AND FASHION:
37d Gallery is located within a beautiful contem- Lusaka hosts many music festivals, fashion
porary building in the Kabulonga area. The gallery events and concerts annually, the most prominent
holds a wide range of art works by both local Zam- being the Octoberfest, the Lusaka International
bian artists and international artists. Film and Music Festival, and Stanbic Music Festi-
Namwandwe Gallery houses the world’s largest val. Many bars and restaurants offer live music on
permanent collection of carefully selected Zam- Thursdays and throughout the weekend. Another
bian artworks and holds temporary exhibitions notable live music venue in Lusaka is The Misty, a
focusing on contemporary art and up-and-coming jazz restaurant and café at the Levy Mall.
Zambian artists.
Henry Tayali Art Gallery is named after a famous NIGHTLIFE:
Zambian artist who made great efforts at raising Although Lusaka does not have a hectic nightlife
the profile of indigenous arts and crafts in Zambia. scene, several venues stand out for an evening
The art centre is also the home of the Zambia Na- out in a pleasant atmosphere.
tional Visual Arts Council. Alpha Bar is an absolute legend in Lusaka and
Lusaka Playhouse is the city’s own theatre locat- draws a wide range of individuals, all who gather
ed near the Southern Sun and Taj Pamodzi hotels to find a drink and dance the night away. It’s the
in Ridgeway, featuring a variety of local Zambian one place in the city where you’re guaranteed
productions. there will be music playing every night of the
Kabwata cultural village has about 80 resident art- week. Visitors who don’t feel like dancing can play
ists from nine provinces of Zambia, such as wood- pool instead.
carvers and basket weavers, who display their Chez Ntemba in Kabulonga is one of the best
crafts and have made the village their home. Their nightclubs in the downtown area, mostly playing
artworks - figurines of humans, bird and animals; rhumba. It is a part of an international chain of
walking sticks, drums, spears, textiles and fabrics, nightclubs and opened its Lusaka venue in 1992.
sculpture, and beads are exhibited and sold. Visi- At its busiest on Friday and Saturday nights, it
tors come to see performances by local dancers warms up at midnight and the partying continues
on weekends and public holidays and sample until dawn.
Zambian delicacies at the traditional restaurant at Keg & Lion is a popular venue for the local clien-
the village. tele on Friday nights and has three beers on tap,
does excellent pub food and has all the sports you
Zambian Art and Design Show is a fair that fea- need on the TV.
tures Zambian craftsmen and their best hand- The Orange Tree Public House is a gastropub fea-
made works in furniture, kitchen ware, jewelry, re- turing a unique, modern European menu, select
cycled fashion and hand-woven rugs and textiles. wines, craft beers and spirits and throws a decent
The show has grown steadily over the years, both party on Fridays with live music and a hip interna-
in number of exhibitors and spectators who attend tional crowd.
the fair.

CASINOS: SPORT:
Lusaka has over 10 casinos with 516 slots and Lusaka hosts several sporting events throughout
gaming machines and a total of 59 table games, the year.
including poker. The largest casino in Lusaka is Over the last two decades, rugby has become a
Casino Marina Lusaka on Kasangula Rd, which truly Zambian sport with the majority of its players
opened its doors to the public in October 2016, fol- coming up through the schools and local club sys-
lowed by Lusaka Royale Casino with 165 gaming tem. Zambia has over the last seven years built its
machines and table games conveniently located own highly respected 7s tournament in the form
 ENTERTAINMENT GUIDE 237

of the Lusaka Mosi International Sevens. Past Championship Series with multiple rounds being
winners include the Springbok under-23s and the held in and around Lusaka. In addition, there are
British Army. regular Spinning events that draw large crowds.
There are a number of fun events held at the vari-
Interms of football Zambia hosted the Africa U-20 ous tracks, however, for the casual off-roader and
Cup of Nations, the two-yearly international youth serious competitor alike, the Siavonga 400 starts
football tournament organized by the Confedera- in Mazabuka, spends two nights in Siavonga and
tion of African Football (CAF) for players aged un- finishes in Lusaka having come through a spec-
der twenty. tacular dirt road pass. The Elephant Charge is an
annual event, which challenges teams of cars and
The Zambian polo season begins in April and fea- motorbikes to complete a gruelling course through
tures two notable tournaments – The Safari Polo the Zambian bush. The Charge is held to raise
tournament hosted by the Lusaka Polo and Hunt money for conservation in Zambia.
Club for more than 20 years and the Annette Miller
Cup, an international tournament which has seen Other activities Include:
India, the United States and Ireland represented mountain biking, golf, paintball, go-carts, mini-golf,
among the participants. cinemas, swimming pools, spas, sports betting,
bird walks, photography walks, private members
Lusaka hosts international Rally and MotoX events clubs, wine, beer and whiskey tastings, Interna-
that form part of regional series. There are also tional food fairs, polocrosse and show jumping.
the respective National Rally, MotoX and Enduro
238 RESTAURANT GUIDE

Restaurant Guide
Lusaka à la carte

The Horse Shoe Grill (Steakhouse, European, Sheesha Lounge)

Nangwenya Road, Showgrounds area
+260 96 328 3698

The Horse Shoe Steakhouse is a stylish restaurant located in a cool and calm environment overlooking
the Lusaka Polo grounds. Both the main restaurant and the adjoining Sheesha Lounge are decorated in
a chic “opulent barn” theme. This restaurant serves a wide variety of prime steaks. You can also enjoy
tasty buffet roasts every Sunday, perfect for the whole family. Or relax at their fully stocked casual bar
over a glass of wine or cold beer. An ideal venue for corporate meetings and social gatherings over a
great meal.
 RESTAURANT GUIDE 239

Marlin Restaurant (Steakhouse, European) The Royal Dil (Indian, Asian, Vegetarian
Los Angeles Road, Longacres Friendly)
+260 211 252 206 Acacia Park, Great East Road and Thabo Mbeki
www.marlinzambia.com Road
+260 211 841 015
Hussar Grill (Steakhouse, European)
East Park Mall, Cnr Great East Road & Thabo The Roan and Sable (Grill, Gastropub)
Mbeki Street 1 Chila Road, Kabulonga
+260 96 388 6734 +260 97 394 4170
www.hussargrill.co.za/find-us/zambia-lusaka/
Dil Restaurant (Indian, Chinese, Asian, Veg-
Chang (Thai, Asian, Vegetarian Friendly) etarian Friendly)
22768 Acacia Park, Great East Road and Thabo Plot 153 Ibex Road, Kabulonga/Ibex hills
Mbeki Road +260 211 262 391
Tel: +260 211 258 425
www.chang-thairestaurant.com/ Il Portico (Italian, European, Mediterranean)
The Village, Leopards Hill Rd
Bombay Lounge (Indian, Asian, Vegetarian +260 96 980 6957
Friendly)
East Park Mall, Cnr Great East Road & Thabo The Sugarbush Café (European, Café)
Mbeki Street Leopards Hill Road, 1.2km past State Lodge Rd
+260 211 324 126 +260 96 764 8761

The Orange Tree (European, International, Gastropub)

Twin Palm Road, Kabulonga
+260 211 269 367

With a commitment to the unordinary, The Orange Tree has blazed the trail in Zambia. Bringing the wid-
est selection of craft beers and gins into the country to market before the competition. This unorthodox
father-son duo have set about becoming specialists in live music, with exciting local and international
bands to be found every Friday night, next to a roaring pizza oven and some of the finest bbq ribs
around, basted in their signature rum bbq sauce. The Orange Tree is exceptionally family friendly, with
an enormous play area, epic kid’s parties, as well as complimentary pizza-making lessons for all. It’s
everybody’s local, set on a sprawling one acre garden in the heart of Lusaka.
240 RESTAURANT GUIDE

Dulce by Jessie (International, Western, Local)

Plot 50 J, Sable Road, Kabulonga
+260 97 591 3558

We would like to introduce to you the proprietor and head chef of ‘Dulce by Jessie’, Ms Jessie Chipindo!
After a successful era of having three branches of the Dulce & Banana restaurant, Jessie has now
opened her new branch ‘Dulce by Jessie’, which is the first of her restaurants at an independent venue.
Jessie’s love for food started at the age of 15 and she has been cooking ever since. Jessie is a young
female Zambian entrepreneur, who has grown from having a small lunch place into being one of Zam-
bia’s most celebrated chefs. Jessie is known for her delicious cakes as well as her soul-food dishes,
which can best be described as a fusion ranging from Italian-Mediterranean to Asian. And, of course,
the menu has a section with food from the Motherland, Zambia!
Located in Kabulonga, Dulce by Jessie offers a quiet and spacious getaway to spend an afternoon at
the pool, an intimate evening in the inside dining area or a chill at the lounge. The venue has a lovely
garden that makes it perfect for weddings, bridal showers, birthdays, corporate functions and more.
Dulce by Jessie is open every day of the week for breakfast, lunch and dinner.

The Zambean Coffee Co. (European, Café) The Manor (Italian, European, Mediterranean,
Leopards Hill Road, The Leopards Hill Business International)
Park No.18, corner of Saise and Mushemi, Rhodes
+260 96 677 6776 Park
+260 96 428 3272

Mint Lounge (Cafe, Vegetarian Friendly, Gluten Mezban Paradise (Indian, Vegetarian Friendly)
Free Options) Chindo Rd, Near Kabulonga Intersection
Acacia Park, Arcades area +260 97 633 7345
+260 97 507 1505
ROSSO Trattoria – Pizzeria (Italian, European,
The Deli (Cafe, Vegetarian Friendly, Vegan Op- Mediterranean)
tions) Intercontinental Hotel, Haile Selassie Avenue
1196/6 Lunzua Rd Rhodes Park +260 211 250 000
+260 211 253 539
The Cake Bar (Café, International)
Sandy’s Creations (International) Cosmopolitan Mall, Makeni Rd, Kafue Road
4300 Kafue Road Woodlands Shopping Centre, Woodlands
+260 211 278 220 +260 96 112 3456
 HOTEL GUIDE 241

Hotel Guide
A Good Night’s Sleep
LUSAKA:

RADISSON BLU HOTEL LUSAKA

19029 Great East Road

Tel: +260 211 368 900
Mobile: +26 96 028 0900
Fax: +260 211 368 949
Email: info.lusaka@radissonblu.com
www.radissonblu.com/en/hotel-lusaka

Rooms: 142 rooms and suites

Business & Conference: 5 meeting rooms and 2 ballrooms with 502 m2 and a corresponding pre-func-
tion area, each meeting room is equipped with state of the art technology and free high-speed, wireless
internet, and a dedicated conference coordinator.
Health & Leisure: A pool, a well-equipped gym, a spa, massage therapy, facials, body wraps and cus-
tomized treatments.
Guest Services: Free high-speed, wireless internet access throughout the hotel and on-site parking for
up to 300 cars.
Dining: Chuma Grill Restaurant & Bar (African fusion-inspired restaurant serving African dishes and
international classics), Super Breakfast Buffet (hot and cold dishes as well as fresh breads and fruit),
Chuma Grill Bar (snacks and light meals).
242 HOTEL GUIDE

INTERCONTINENTAL LUSAKA

Haile Selassie Avenue

Tel: +260 211 250 000
Fax: +260 211 256 035
Email: reservations.iclusaka@ihg.com
www.ihg.com/intercontinental/hotels/us/en/lusaka

Rooms: 224 Guest Rooms & Suites

Business & Conference: 9 meeting rooms - max. 600 theatre style, 450 classroom, 700 reception, 400
banquet. Ballroom dimensions: 37.5 x 20 m with 3.2 m ceiling height – can be divided into two spacious
rooms. Capable of organising prestigious banquets. Wheel chair access in all the meeting rooms.
Health & Leisure: Fitness centre with gym/workout room, outdoor pool, spa, tennis court.
Guest Services: Staffed business centre open from 6 am to 11 pm, Executive Club level, same-day
laundry, foreign exchange, doctor on call 24/7, wired internet available in rooms, suites, business cent-
er, public areas and meeting spaces. On-site parking for up to 200 cars.
Dining: Safari Bar (wide selection of beverages and snacks), The Rhythms Café (coffee, tea, and home-
made cakes), Rosso Trattoria (Italian cuisine).

SOUTHERN SUN RIDGEWAY

Cnr. Church Road and Independence Ave

Tel: +260 211 251 666
Fax: +260 211 253 529
Email: SSRidgeway.Reservations@tsogosun.com
www.tsogosun.com/southern-sun-ridgeway-lusaka/
Rooms: 155 Guest Rooms & Suites
Health & Leisure: Hotel gym is accessible to all guests 24 hours a day, an outdoor pool.
Guest Services: Free high-speed wireless internet access, full business centre with internet connectiv-
ity, board rooms, secretarial services.
Dining: Musuku Restaurant (traditional international cuisine, local signature dishes), Musuku Terrace
and Bar (casual lunches, light meals, informal meetings).

TAJ PAMODZI HOTEL

Church Road
Tel: +260 211 254 455
Fax: + 260 211 254 005
Email: pamodzi.lusaka@tajhotels.com
https://vivanta.tajhotels.com/en-in/pamodzi-lusaka/
Rooms: 193 Guest Rooms & Suites
Health & Leisure: Fitness centre with cardiovascular equipment and weight section with state-of-the-art
equipment.
Business & Conference: Five meeting rooms including a boardroom, which offers comfortable seating
for 45 to 500 guests.
Guest Services: High-speed broadband internet, full business centre with internet connectivity, a jew-
elry shop, squash courts and a swimming pool, express laundry/dry cleaning, doctor on call, labyrinth
garden.
Dining: Jacaranda Coffee Shop (daily buffet breakfasts, weekday buffet lunches and a Sunday brunch,
International cuisine, local specialities), Marula Bar (exotic international cocktails and drinks), Steaks &
Grills (intimate open-air restaurant with a rustic, ethnic ambience).
 HOTEL GUIDE 243

BEST WESTERN PLUS LUSAKA GRAND HOTEL

Great East Road 8018A

Tel: +260 211 239 666
Email: reservations@lusakagrand.co.zm
www.lusakagrand.co.zm
Rooms: 92 Guest Rooms & Suites
Business & Conference: Five meeting rooms including a grand ballroom, boardroom, which offers com-
fortable seating for up to 350 guests. All rooms are equipped with sound systems and have internet
connectivity.
Guest Services: High-speed broadband internet, full business centre with internet connectivity, a swim-
ming pool, express laundry/dry cleaning.
Dining: Rembrandt Restaurant (full service, international cuisine, open for breakfast, lunch, and dinner),
Cosmopolitan Bar (bar/lounge, international cuisine, bar snacks), Waterfall Bar (pool bar, cocktails).

CRESTA GOLF VIEW HOTEL

Great East Road 10247

Tel: +260 97 956 2325
Email: resgolfview@cresta.co.zm; reservations@crestahotels.com
www.crestagolfview.com
Rooms: 78 Guest Rooms & Suites
Business & Conference: Four spacious conference facilities and two executive boardrooms for up to
300 guests. All rooms are equipped with sound systems and have internet connectivity. Outdoor confer-
ence/banquet area available for up to 450 guests.
Guest Services: High-speed broadband internet, spa, a gym, a swimming pool.
Dining: Chatters Restaurant (business lunch, casual dining, Zambian specialities, international cuisine),
Chatters Cocktail Bar (cocktails, snacks).

PROTEA HOTEL LUSAKA

Arcades Shopping and Entertainment Complex,

Corner Thabo Mbeki and Great East Road,
Tel: +260 211 254 664
Fax: +260 211 254 606
Email: reservations@phlusaka.co.zm
www.proteahotels.com/Lusaka

Rooms: 100 Guest Rooms

Business & Conference: The hotel has two conference rooms and four boardrooms. The conference
rooms combined seat maximum 120 guests.
Guest Services: high-speed complimentary wireless internet, complimentary on-site parking, splash
pool.
Dining: Protea Hotel Lusaka Restaurant (international cuisine, open for breakfast, lunch and dinner) The
Steakhouse Restaurant (breakfast, lunch, dinner, international cuisine) Cloud 9 (rooftop bar, snacks,
cocktails).
244 HOTEL GUIDE

PROTEA HOTEL LUSAKA CAIRO ROAD

Plot 11 A Cairo Road, Katondo Street

Tel: +260 211 238 360
Fax: +260 211 238 317
Rooms: 68 Guest Rooms
Business & Conference: The hotel has four meeting rooms. The conference rooms combined seat
Aamaximum of 100 guests theatre style.
Guest Services: High-speed complimentary wireless internet, complimentary on-site parking, outdoor
pool.
Dining: The Mutaba Restaurant (international cuisine, open for breakfast, lunch and dinner, snacks),
The Residents Bar (snacks, cocktails).

PROTEA HOTEL LUSAKA TOWER

Arcades Shopping and Entertainment Complex, Cnr Thabo Mbeki and Great East Road
Tel: +260 211 375 800
Fax: +260 211 375 810
Email: reservations@phlusakatower.co.zm
www.proteahotels.com/Lusaka

Rooms: 137 Guest Rooms

Business & Conference: The hotel has six event rooms. The conference rooms combined seat maxi-
mum 70 guests.
Guest Services: High-speed complimentary wireless internet, complimentary on-site parking, splash
pool.
Dining: Protea Hotel Lusaka Restaurant (international cuisine, open for breakfast, lunch and dinner)
The Steakhouse Restaurant (breakfast, lunch, dinner, international cuisine) Cloud 9 (rooftop bar,
snacks, cocktails).

STAYEASY LUSAKA

Corner of Church & Kabelenga Road, Levy Business Park

Tel: +260 97 477 8858
Fax: +260 211 372 020
Email: StayEasyLusaka.Reservations@tsogosun.com
www.tsogosun.com/stayeasy-lusaka

Rooms: 130 Guest Rooms

Business & Conference: One boardroom that can accommodate up to 15 people. This meeting room is
ideal for small conferences and boardroom meetings.
Guest Services: 350 MB of free high-speed Wi-Fi per room daily, self-service workstations, an outdoor
pool and patio leisure area.
Dining: Breakfast buffet.

THE COPPERBELT:

MUKUBA HOTEL

Industrial Area, Ndola

Tel: +260 212 651 000
Email: reservations@mukubahotel.co.zm
www.mukubahotel.com
 HOTEL GUIDE 245

Rooms: 55 Guest Rooms & Suites

Business & Conference: three conference rooms, Mukuba conference room, Imbalasa and the Presi-
dential Pavilion for workshops and seminars.
Guest Services: Expansive ever-green gardens with impalas, guinea fowls and peacocks, complimen-
tary parking.
Dining: Restaurant (a-la-carte, three course buffet, Zambian specialties’ and international cuisine), the
poolside bar, Mutomboko bar.

THE URBAN

Ndola Golf Estate

Nkana Road, Ndola
Tel: +260 96 388 1742
Email: res@theurbanhotelgroup.com
www.theurbanhotelgroup.com

Rooms: 60 Guest Rooms

Business & Conference: Business services are available 24 hours a day at the Smart Bar. Complimen-
tary high-speed wireless internet access, use of a tablet, printing or meeting rooms are available via the
Smart Desk. The Metropolitan Restaurant, located in the Lobby, offers communal work tables outfitted
with convenience outlets for your personal computers or electronic devices.
Guest Services: Complimentary airport transfer, complimentary breakfast buffet, complimentary Wi-Fi
throughout the hotel, customised check-in/check-out times offering paperless check-out,
dedicated account manager.
Dining: The Metropolitan Restaurant (daily specials and sumptuous staples), The Met Patio Bar (snacks,
fresh juices and bar drinks).

PROTEA HOTEL BY MARRIOTT NDOLA

Ndola/Kitwe Dual Carriage Way, Ndola

Tel: +260 212 626 200

Rooms: 80 Guest Rooms

Business & Conference: three conference rooms, two boardrooms, state-of-the-art conference facilities
for up to 200 delegates.
Guest Services: Free high-speed internet in all guest rooms.
Dining: Breakfast buffet.

PROTEA HOTEL CHINGOLA

Kabundi Rd, Chingola

Tel: +260 212 312 810

Rooms: 40 Guest Rooms

Business & Conference: Two event room, state-of-the-art conference facilities for up to 120 delegates.
Guest Services: Free high-speed internet, a swimming pool.
Dining: San Marco restaurant and bar (fresh a la carte and buffet menus, light meals, a variety of wines,
spirits, cocktails and other drinks).
246 HOTEL ARTICLE

Radisson Supports Art

Words by Roy Kausa
Situated underground between the dome shaped The other aims of Temwani gallery shall be to form
front building and the rest of Radisson Blu an interactive forum, to be known as Temwani
hotel is an underground tunnel which has been Village night which shall once in 3 months,
transformed into one of Zambia’s fascinating art comprise of company executives, art collectors,
gallery established in recent times. government officials and the invited artists. This
shall be a night where art works shall be sold
Temwani Gallery displays art works by some of and %50 shall go to a selected under privileged
Africa’s top most painters, such as Mikiti, Style community in Lusaka.
Kunda, David Chibwe, Patrick Mumba, Raphael
Mutulikwa, Nukwase Tembo, Victor Makashi and Temwani Gallery shall also be the first of its kind
many other just to mention but a few. to start “ART FOR RENT” this shall be a village
business project to rent art to the corporate world.
The word, Temwani loosely translated in Cinyanja The last meeting by Temwani village members
means, ”Be Happy!” is also going to be the first observed that it is high time for companies,
of its kind in Zambia because Temwani Gallery is government offices to start hiring art, it has been
going to be based on an African village concept, too much of plants and flower plants. “It’s high
where all members of this community are equal, time CEOs hired paintings and sculptures to make
learn to share their skills, life experiences and their board rooms look real instead of turning them
support each other to sustain their lives. into equatorial forests.” said Raphael Mutulikwa.

Secondly, based on the village concept, the gallery Temwani village members have commended the
shall be led by the Headman or Headwoman, entire Radisson Blu management and especially
who in fact from the western world point of view Mr Marius Wolmarans the General Manager who
is known as a curator. The village headman or has personally been involved to see that the
woman shall once every month end chair the gallery meets international standards.
village Insaka meetings.
The establishment of this art gallery at Radisson
One of the main objectives of Temwani Gallery Blu is yet another corporate social responsibility
shall be to collaborate with other galleries in by the hotel management to give back to the
Zambia, the region and overseas, encourage the community by helping the Zambian artists sustain
corporate world, such as insurance companies their lives by selling their art works. The art
and banks for example to start collecting art. gallery also provides a chance for the tourists and
Temwani gallery shall also organize workshops for the Lusaka local visitors to the Radisson Blu to
the artists to exchange ideas on how to meet the sample the Zambian cultural heritage through a
demands of the international art consumers. The mouth-watering display of Zambian art.
gallery shall also hold solo art exhibitions three
times a year. TEMWANI IS HERE TO STAY!
ZESCO call for investment
Zambia’s access rate to electricity remains as low as 23% of the population. In order to
increase the access rate beyond 51% whilst meeting the demand for reliable and safe
electricity supply in the region and beyond, ZESCO needs investment partners to develop
infrastructure in generation, transmission and distribution.

Zambia like the rest of Africa is going through very rapid transformation. Energy is going to
be a big part of the social-economic equation to facilitate this transformation. ZESCO is
re-positioning itself to meet the infrastructure challenges that will be posed by this rapid
development. For instance, ZESCO now has the largest Fibre Optic network in Zambia.
The Electricity Supply Industry was already opened up in the mid-nineties to encourage
private investment participation in the ESI. Politically, Zambia has maintained peace and
stability for over fifty-three years since independence.

Zambia’s laws are also very strong in protecting investments. Zambia’s central position is
now being aggressively exploited by developing communication and electrical
interconnectors as we are land linked to no less than eight neighbours on all sides. Further,
Zambia belongs to two major economic blocs namely, SADC (Southern African
Development Cooperation) and COMESA (Common Market for Eastern and Southern Africa),
which gives companies that set up industry in Zambia easier access to millions of people.
Cyber Security
In line with fostering the growth and
development of Cyber Security
response mechanisms and
intelligence gathering across sectors,
Cyber Solution
KPMG Zambia recently flagged off a Implementation
comprehensive bouquet of cyber
security services to enable our clients: • Identity and access
• Establish cyber security policies and
procedures Compliance management.
• Privileged Access
Management.

• Build cyber defence and resilience

capabilities
Services • Network Access Control.
• Cyber incident Response
(Intelligence, Detection &
Response).

To access our cyber security thought

leadership and service catalogue, • ISO 27001 & 22301
certification.
please visit our website. • PCI •DSS
ISO 27001 & 22301
certification.
Certification.
Cyber Security
• PCI DSS Certification.
• Swift CSPCSP Compliance.
• Swift • Vulnerability
For further information or Compliance. Assessment &
Penetration testing.
clarifications, we can be reached on • Infrastructure Security
Remediation hardening.
the address below. • Cyber in the Audit
(CITA).

Email: zm-fminformation@kpmg.com
Tel:+260 211 372900
http://www.kgmg.com/zm    • Cyber Maturity Assessment.
• Cyber Security Strategy & Governance.
Security
• Cyber Security Architecture.
Testing
Remediation
Cyber / Hardening
Security
Transformation