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Investment Climate

Provided by Zambia Development Agency

 

                REASONS TO INVEST IN ZAMBIA

Zambia is a multi-party democracy and provides a market oriented liberalized economic environment. The Zambian Government welcomes all investors and has designed a package of incentives aimed specifically at creating a sound investment climate for increased domestic economic growth.

The country's central location in the region as well as combination of following key strengths makes Zambia an ideal investment destination.

  • Abundance of natural resources and labour, which are highly under-utilized
  • Continuous political stability since attaining independence in 1964
  • Abolition of Controls -Price, Interest Rate, Foreign Exchange and free repatriation of earnings and repayments
  • Guarantees and Security to investors with statutory rights to full and fair compensation
  • Duty Free Access to Regional, wider African and the USA markets under SADC, COMESA/FTA, AGOA (African Growth and Opportunity Act), and Cotonou Agreements respectively
  • Banking, Financial, Legal and Insurance services of international standard as well as a Stock Exchange
  • Double Taxation Agreements with number of European, North American, African and Asian countries
  • Attractive place to work and live - sub-tropical climate and vegetation with plenty of water and electricity. Friendly people, mostly English speaking with high literacy rate. Educational establishments to University level. Strong religious values. Open-air lifestyle with nature reserves, game parks, rivers, lakes and waterfalls.
  • Thriving Private Sector - Government has successfully privatized most of the previously state owned enterprises thus encouraging an entrepreneurial spirit.

                INVESTMENT INCENTIVES

The Investment Act of 1993 (amended 1st April 1996) offers a wide range of incentives in the form of tax allowances, exemptions & concessions for companies, which include:

  • Buildings for Manufacturing, Mining and Hotels enjoy initial allowance of 10% and an annual 5% wear & tear Allowance of the cost.
  • Machinery for Farming, Tourism and Manufacturing qualify for wear & tear allowance of 50% per annum for the first two years.
  • Dividends from farming exempt from tax for first 5 years
  • Capital Expenditure on farm Improvements -20% per year write off for the first 5 years
  • Farm Works Allowance - 100% write off on stumping, clearing, prevention of soil erosion, boreholes, wells, water conservation and aerial or geographical surveys.
  • Customs Duty Exemption on machinery and equipment for mining and agriculture
  • Duty Free Imports of organic and inorganic chemicals, rubber, steel and plastics; most other inputs at 5%.
  • Customs Duty on Intermediate Goods 15% and on Finished Goods 25%.
  • Specific sector-related fiscal incentives and duty/tax concessions packaged for the Mining, Manufacturing, Agriculture, Tourism and Energy sectors.

Some incentives relating to investments on the Lusaka Stock Exchange (LuSE):

  • Corporate Tax reduced to 33% compared to normal 35%
  • Foreign Ownership - No restrictions on ownership levels
  • Shareholder Levels - No restrictions on shareholder levels
  • No Capital Gains Tax

Reference can be made to the taxation table below, (see Table 1).

Table 1: Taxation, 2006

Taxation

(%)

Companies listed on LuSE 

33 %

Manufacturing & Service Companies

35 %

Farming & Export of Non Traditional Product (except Copper & Cobalt)

15 %

Individual Income Tax

10 - 30 %

Withholding Tax

15 %

Banking & Financial Institutions:

  • Up to K 250 million
  • Above K 250 million

35 %

45 %

Source: ZRA

Rural Enterprises qualify for one-seventh of normal 35% corporate income tax rate in the first 5 years of its operation.

                              ZAMBIA DEVELOPMENT AGENCY

In accordance with the Government's aim to enhance investment, plans are presently underway to establish the Zambia Development Agency (ZDA) in 2006. The ZDA will be a result of the merger of the Zambia Investment Centre (ZIC), the Zambia Export Board (ZEB), the Zambia Privatisation Agency (ZPA), the Zambia Export Processing Zone Authority (ZEPZA), and the Small Enterprise Development Board (SEDB), respectively. The ZDA will facilitate investors' access to all information and services that they may be required in order to set up investments in the country. Understandably, the ZDA had been referred to as a "one-stop-shop".  

Investment incentives available to companies operating under the proposed ZDA Act for a period of five years from the year of first declaration of profits include:

  • No tax on dividends will be paid by companies operating under the proposed ZDA Act for a period of five years from the year of first declaration;
  • Only 50 percent of the profits made by companies operating under the proposed ZDA Act will be taxed under the Income Tax Act for a period of five years from the first year profits are made;
  • For the purpose of the Income Tax Act, capital expenditure on improvement or for the upgrading of infrastructure will qualify for improvement allowance of 100 percent of such expenditure for tax purposes; and
  • Suspend customs duty to zero percent for a period of five years on machinery and equipment acquired by business enterprises that will operate under the proposed ZDA Act or rural enterprises.
JOINT VENTURE PARTNERSHIPS

 Zambia Investment Centre is presently facilitating joint ventures between local and foreign investors. Foreign companies are invited to set up operations in Zambia by forging strategic partnerships with Zambian companies. The nature of these joint venture partnership is co- ownership of a business, where there is joint decision making. The partnership will be formed on the basis of each bringing assets into the business, in the form of capital, expertise and/ or technology.

The Zambia Investment Centre provides a match-making facility that compiles a database of foreign investors seeking local partners, as well as a list of local companies seeking foreign partnerships.

Joint Venture Partnerships provide opportunities for foreign investors to collaborate with Zambian companies across all sectors, thereby promoting business developments and access to both the domestic and global markets.

LEGAL FRAMEWORK FOR INVESTMENT PROTECTION

The Investment Act of 1993 (amended 1st April 1996) assures investors that property rights shall be respected. No investment of any description can be expropriated unless Parliament has passed an Act relating to the compulsory acquisition of that property. Also, in case of expropriation full compensation shall be made on market value and shall be convertible at the current exchange rate.

Zambia is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank and other international agreements. This guarantees foreign investment protection in cases of war, strife, disasters, and other disturbances or in cases of expropriation. Zambia has signed bilateral reciprocal promotional and protection of investment protocols with number of countries.

FIRST VISIT CONSIDERATIONS

Visitors' Visa

Nationals of Common Market for Eastern and Southern Africa (COMESA) and Commonwealth member countries generally do not require visa to visit Zambia. However, there are exceptions as Nationals of following Commonwealth countries do require visas to visit Zambia;

  • The Gambia
  • Ghana
  • India
  • Pakistan
  • Papau New Guinea
  • Sri Lanka
  • United Kingdom

Obtaining a visa is generally straight forward, provided that all the required documentation is available. Visa may be obtained from:

The Chief Immigration Officer

New Kent Building

Haile Selassie Road

P. O. Box 50300

Lusaka. Zambia.

Alternatively visas may be obtained from any Zambian High Commission and Embassy overseas. It is also possible to obtain Visa at Zambia entry points for some specified foreign country nationals (e.g. UK and the USA - please check prior to departure). It should be noted that a work permit is required before any foreign national can take up employment in Zambia.

An Airport departure tax of USZMK20 (approximately K70,000) for external journey and US ZMK5 (approximately K20,000) for domestic travel has to be paid prior to checking in for the flight.

Vaccinations

  • Cholera: required if passengers are coming from an infected zone.
  • Yellow Fever: required only if passengers have been in an infected zone a week prior to their arrival in Zambia.
  • Anti-Malarial Precaution: highly recommended that you take anti-malarial medication before coming to Zambia. Please contact competent medical authority in your country for appropriate advice. 
 TRAVEL AND ACCOMODATION

Airline

There are direct international flights into Lusaka from Johannesburg, Nairobi, Dar-Es-Salaam, Lilongwe and Harare.  Moreover, there are direct international flights into the Copperbelt town of Ndola from Lubumbashi, as well as into Livingstone in the Southern province from Johanesburg.

Domestic flights run between Lusaka and Ndola, Chipata and Mfuwe in the Eastern province, and Livingstone.

Air Charter

For businessperson who cannot fit his/her busy schedule into designated daily flights, it is possible to charter a plane from reputable companies. Chartered planes do fly to additional domestic destinations.

Hotels

Zambia has hotels of international standard, which provide first class business and conference facilities.

Car Rentals

Numerous car rental companies provide quality cars, some possessing Four Wheel Drive vehicles, both in town and at the Airports.

GENERAL CONSIDERATIONS

Driving

  • Left hand side of the road.
  • Legal driving age is 18 years old.
  • All foreign drivers must have an International Driving Permit.

Electrical Current: 240 Volts

Weights and Measures: the metric system

Monetary System

  • Currency: Zambian Kwacha (ZMK)

100 Ngwee = 1 ZMK

  • Denominations:

Notes:               K20, K50, K100, K500, K5000, K10000, K20,000, K50,000

Coins:               None in circulation

There are no restrictions on importation of foreign currency into Zambia. The only requirement is that all cash and travellers cheques should be declared on Customs Form T2 available from customs officers at the port of entry.

The Zambian Kwacha floats freely against the major world currencies including the US Dollar, British Pound, kwacha and South African Rand. IMF's Special Drawing Rights (SDR) and COMESA Unit of Account (UAPTA). There are no restrictions on foreign currency dealings (proof of travellers cheque purchase is needed) and can be changed over the counter in any bank and at the numerous Bureau de Change. ATM machines are located outside banks as well as at Shopping Malls.

Business Hours

Zambians use 24-hour clock, in conversation as well as in writing (instead of the "a.m." or "p.m."). Normal working hours in Government and private sector offices are from 8.00 - 13.00 hours and 14.00 - 17.00 hours between Monday and Friday. Banks operate from 8.15 - 14.30 hours between Monday and Friday. Most banks are closed for business at weekends except the first and last Saturdays of each month when they open from 8.15 -11.00 hours. Supermarkets are open every day until 21.00 hours except until noon on Sunday.

Public Holidays

1st January                       New Year's Day

12th March                        Youth Day

Easter                              Good Friday

Easter                              Easter Monday

1st May                             Labour Day

25th May                          Africa Freedom Day

1st Monday in July             Heroes Day

1st Tuesday in July            Unity Day

1st Monday in August        Farmers Day

24th October                     Independence Day

25th December                 Christmas*         

*Many organizations close shortly before Christmas for "industry break" and reopen after first week in January.

Zambians are relatively very friendly people. If you have any problems any Zambian asked for help will be glad to assist you. Enjoy your stay and we hope you return to Zambia and invest in a profitable enterprise subsequently promoting our economic growth.

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