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ENTREPRENEURSHIP AND INNOVATION
2016 HANDOUT 2 (BBA360)
THE ROLE OF ENTREPRENEURSHIP & SMALL BUSINESSES IN
NATIONAL ECONOMIC DEVELOPMENT
1.0 NATURAL RESOURCES AS THEY RELATE TO ENTREPRENEURSHIP
The extent to which a country is endowed with natural resources may contribute a
great deal to that country’s level of entrepreneurship. By their nature, natural
resources are a building block for entrepreneurial activities. There are several
entrepreneurial activities that emanate from the efficient and effective utilization of
natural resources. In fact, everything we see under the sun comes from the various
natural resources that God has endowed us with. Examples include:1.1 Land resources
i.
Farming
ii.
Clay for pottery
iii.
Stone for masonry
iv.
Stone for minerals and gemstone mining
v.
Sand for glass
vi.
Stone for cement and ultimately for building blocks
1.2 Water resources
i.
Fishing
ii.
Reeds for mats, baskets
iii.
Water for domestic use, construction and building, etc
iv.
Irrigation
1.3 Forest resources
i.
Saw milling
ii.
Wood
iii.
Furniture manufacturing
iv.
Windows, doors and door frames
v.
Curios, wooden carpentry tools
vi.
Honey production
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vii.
Wild fruits
viii.
Flowers
ix.
Herbal medicines
x.
Thatching
xi.
Wildlife providing tourism and conservation activities
1.4 Human resources
i.
Skills
ii.
Intellectual capacity
iii.
Knowledge
iv.
Effort and time
It can be observed from the above examples that the list of entrepreneurial activities
that emanate from natural resources is endless. The learning point for an entrepreneur
is that natural resources must be critically examined and exploited as sources of a
variety of entrepreneurial activities.
2.0 THE ROLE OF ENTREPRENEURSHIP AND SMALL BUSINESSES IN
NATIONAL ECONOMIC DEVELOPMENT
Entrepreneurs and Small Businesses worldwide play a very pivotal role in National
Economic Development. Some of the key contributions of entrepreneurs and small
businesses in National Economic Development include the following:-
Employment Creation
Even though most small businesses employ very few workers because of the size of
their venture, the aggregate effect on employment creation is very high. For instance,
if one million small businesses in Zambia employ four workers each, it means that the
sum total of jobs created by all of them is four million jobs and this is very significant
and important for a country like Zambia with high unemployment levels.
Contribution to the National Treasury
2
Even though statistically, most small businesses are said to be outside the tax net, they
still contribute in their small way to the National Treasury through the payment of
various rates, levies, licensing fees and even taxes.
Foreign Exchange Earnings
There are a number of small businesses in Zambia that have penetrated the export or
foreign markets. In doing so, these small businesses inevitably contribute to Foreign
Exchange Earnings for the country. All efforts must therefore, be made to ensure that
as many small businesses as possible with export potential are supported to grow their
export businesses so that country continues to record increased foreign exchange
earnings
Agents of Technology Transfer
A number of small businesses are increasingly appreciating the need for and
importance of employing State-of the-Art technology in their businesses' operations.
This growing desire to use modern technology among small businesses has positive
effects in terms of technology transfer, particularly to rural parts of Zambia, which
need to be opened up for development. Technology transfer is key in bringing about
high productivity and up-scaling the quality of goods and services among small
businesses. This is crucial for National Economic Development.
Contribution to rural industrialisation
Closely related to the issue of technology transfer is the issue of rural
industrialisation. Small businesses when compared to large businesses, have very low
establishment or start-up costs. Because of these low establishment or start-up costs,
most small business are able to easily establish rural cottage or small industries, which
process is stimulating rural industrialisation. Even when large enterprises set large
scale industries in rural areas, they still require anchor small businesses to supply
them with various requirements and in the process, small businesses also act as agents
of rural industrialisation. What is key is for large Enterprises to forge efficient,
effective and sustainable business linkages with small businesses in order to increase
small businesses supplier and market opportunities, which are crucial for their (small
businesses) growth.
Promotion of Value Addition
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Zambia is endowed with so many natural resources such as forests, mineral deposits,
wildlife, arable land and water resources. Small businesses therefore, play their part in
adding value to these natural resources and thereby create various business
opportunities. This is very key in order to prevent the wastage of such resources. As
long as the utilization of these resources is sustainable and has a replacement effect,
small businesses must be supported to add value to the country's natural resources'
endowment and consequently contribute to National Economic Development.
Inculcating and promoting a culture of Entrepreneurship and Self-reliance
among citizens
Existing small businesses act as agents of inculcating, stimulating and promoting a
culture of entrepreneurship and self-reliance among citizens. This development is
very positive and has long lasting impact in terms of fighting poverty, hunger, disease
and the high unemployment levels in the country. Existing small businesses usually
act as role models for future entrepreneurs. They inspire other people to emulate them
and aspire to start their own small businesses. The multiplier effect is very positive for
the nation at large.
Weakening Monopoly
Monopoly in trade, industry and business holding is the commonest evil in most
developing countries. Increased entrepreneurship breaks up monopolies and brings
about efficiencies thus increasing productivity. As results products and services
produced are of high quality.
Harnessing Youth Vigour
The educated youth are full of vigour, with sharp abilities in circulation for success,
self-employment offers excellent opportunities to harness such youth vigour.
Entrepreneurship requires versatility, determination and ambitions which are readily
available among the youths. Entrepreneurship helps to harness such talent.
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Increasing disposal Income
Entrepreneurship leads to high economic activities in a nation. With increased
economic activities, disposal incomes of citizens increase enabling citizens to have
high quality lives.
3.0
REQUIREMENTS
FOR
SUCCESSFUL
ENTREPRENUERSHIP
ADOPTION IN A COUNTRY
3.1 INTRODUCTION
There are a number of requirements for success in the pursuit of entrepreneurship and
small business management in economic. Some of these factors are internal to the
entrepreneur and other are external. This sector will attempt to look at the external
factors that will successfully promote entrepreneurship development in the economy.
3.2 FACTORS FOR SUCCESSFUL ENTREPRENEURSHIP DEVELOPMENT
3. 2.1 Government Incentives
It may appear as a contradiction that entrepreneurship should look to Government for
assistance. New business is not in a position to be viable from the first day of
operation and may face global competition. A new business needs to be nurtured in
order to enable it to develop its markets and gain sufficient sales to be viable. There is
need therefore for Government incentives to support business in its initial stages.
These include incentives such as tax breaks or holidays, grants for plants and
machinery, technical support in form of training, research and development.
Incubation facilities may also be provided where a number of small businesses can be
housed to reduce on overheads such as electricity, water, telephone, rentals and other
services.
3. 2.2 Education and training
Education and training play an important role in creating capacity and equipping
individuals to enter the business arena. While minimum levels of numeracy and
literacy are assumed to be possessed, there are also skills that are needed such
planning, production, purchasing, marketing, manufacturing, accounting etc.
successful entrepreneurs are those who have a firm understanding and comprehensive
knowledge of the business sector in which they operate. They need to be continuous
learners who are always updating themselves about the external environment in which
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they operate. Where skills are lacking, information and advice can be sought from
consultants, bankers, business advisors, Zambia Chamber of Commerce and Industry
etc. Successful entrepreneurs have a passion for business and commit themselves fully
to the enterprise. This passion is fueled through reading and discussing all aspects of
business and exploring through research activities.
The window of opportunity is illuminated through the passion of the entrepreneur in
the practice of knowledge acquisition and skills usage.
3. 2.3 Market
There must be a market of sufficient size available before one can consider starting up
a business venture. Market research and intelligence is needed to quantify the market
variables and establish the critical success factors. The golden rule is that: if you can’t
sell it, don’t make it. Correctly establishing the market opportunities for the product
and services is one of the critical activities to be completed before the decision is
made to commerce a business venture.
3. 2.4 Finance
Finance is the lifeblood of every business, without it a business is dead. It is critical to
establish the amount and timing of finance for a business. Research findings are that
more businesses have failed due to lack of finance than for any other factor. Lack of
finance can seriously hamper the operations of small business and considerably
increase the cost of operations. Cash is King
4.0 IMPORTANCE OF ENTREPRENEURSHIP
Entrepreneurship has assumed super importance for accelerating economic growth
both in developed and developing countries. It promotes capital formation and creates
wealth in country. It is the hope and dreams of millions of individuals around the
world. It reduces unemployment and poverty and it is a pathway to prosper.
Entrepreneurship is the process of exploring the opportunities in the market place and
arranging resources required to exploit these opportunities for long term gain. It is the
process of planning, organising, opportunities and assuming. Thus it is a risk of
business enterprise. It may be distinguished as an ability to take risk independently to
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make utmost earnings in the market. It is a creative and innovative skill and adapting
response to environment.
4.1 Promotion
Given entrepreneurship's potential to support economic growth, it is the policy goal of
many governments to develop a culture of entrepreneurial thinking. This can be done
in a number of ways: by integrating entrepreneurship into education systems,
legislating to encourage risk-taking, and national campaigns etc.
5.0 GOVERNMENT POLICIES IN SUPPORT OF ENTREPRNEURSHIP
The Government of the Republic of Zambia realises the role entrepreneurship plays in
the development of the economy and to this end, it has put in place a lot of policies,
programmes and incentives to prop up entrepreneurs. The following are good
examples of government efforts;
5.1 Agriculture Sector
The government under the Ministry of Agriculture runs a programme called Farmer
Input Support Programme (FISP). Under this programme farmers are given inputs in
form of seeds, fertilizer, and other technical services. In the 2015- 2016, farming
season, farmers were being given ten (10) kg of maize seed, two(2) bags of top
dressing Urea fertilizer and two(2) bags D- Compound Fertilizer. They were required
to make a contribution of K400 only. This was done through the e-voucher system
where farmers were given cards from banks. The average price of a bag of fertilizer is
about K400 and maize seed is about K250. The Government equally support the small
scale farmers by buying their produce through Food Reserve Agency (FRA).
5.2 Roads Sector and other Government infrastructure programmes
The Patriotic Front government since coming into power in 2011 embarked on
massive roads construction programme under different code names such as Link
Zambia 8000, L400, Pave Zambia etc. These programme are done under the Road
Development Agency (RDA). The Road Development Agency (RDA) is a statutory
Institution created through the Public Roads Act No. 12 of 2002 to provide for the
care, maintenance and construction of public roads in Zambia. The government has
been also active in other areas such as the construction of Schools, Hospitals, Clinics,
bridges, Universities etc. Under all these programmes, the Government policy has
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been to award at least 20% on all contracts to local entrepreneurs. This has
empowered local entrepreneurs and in a way built capacity among local
entrepreneurs.
.
5.3 Youth Empowerment Programme
The Government under the Ministry of Youth, Sport and Child Development operates
a Youth empowerment scheme. This scheme allows youths under the age of 35 to
access loans of up to K50, 000 without collateral. All the youths need is to have a
registered business or association, community referee, national registration cards, and
a sound business plan. The loans range from three (3) months to Thirty-six (36)
months. The Ministry also offers skills training at youth development centres called
the Youth Resources centres dotted around the country. In the Youth Resource
Centre, youths are trained in various skills such as Carpentry and Joinery, Animal
Husbandry, Farming, Mushrooming growing, Tailoring, Metal fabrication and
wielding, etc. In addition the Ministry, settles youths in agricultural serviced land
where youths are given start up packs to begin farming as a business. The start-up
pack comprises seed, fertilizer, and accommodation for a period of twelve (12)
months.
5.4 Civil Servants Empowerment Programme
Government, through the Ministry of Finance, established the Public Service Micro
Finance Company (PSMFC) in 2013.The PSMFC lends small personal loans to civil
servants at five percent, and since its inception, over 5,700 public service workers in
84 districts of the country have benefited from the microfinance company, with total
disbursements amounting to about K120 million. The PSMFC would in the near
future extend its services to all employees of quasi-government institutions.
Government intentions are to shield public servants from unfavourable lending rates
which could be prohibitive.
5.5 Zambia Revenue Authority Tax Incentives
The Zambia Revenue Authority offers various incentives under broadly two
categories namely; general incentives and industry specific incentives. The following
are the current tax incentives;1
1
As at the financial year ending March 2017 for ZRA: Source ZRA.
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5.5.1 General Incentives
1. Import VAT relief for VAT registered businesses on imports of eligible capital
goods (VAT Deferment)
2. Zero rate of VAT on export of taxable products
3. Guarantee of VAT refund within 30 days of lodgement of adequately
supported claims within 30 days of submission of the claim
4. Relief of VAT on transfer of business as a going concern
5. Equal treatment of services for VAT irrespective of domicile of supplier
(Reverse VAT)
6.
Cash accounting for VAT members of the Association of Building and Civil
Engineering Contractors, and mining companies
7. Guaranteed VAT input tax claim for three months prior to VAT registration
for businesses that have already commenced trading
8. Reintroduction of voluntary registration for compliant businesses whose
turnover is below K200 Million per annum subject to conditions stated above
9. Registered businesses allowed to re – claim 20% of input VAT paid on petrol
10. Exemption of interest component of Finance Leases
11. Zero Rating of VAT on goods and services supplied or imported by
developers of MFEZ and industrial parks and to business enterprises in such
zones
12. VAT relief on input tax paid for purchases made by registered suppliers.
13. Income from non – traditional exports is taxed at a reduced rate of 15%
14. Duty on computer parts/components removed. Computer components on
which duty was abolished is confined to the following:
 Motherboard without CPU and RAM
 Case with or without power codes
 CPU heat sink
 32 bits CPU made of 2 or more ICS, this may include Pentium 3, Pentium
4 or Celeron processors
15. Increase the threshold for travellers’ personal effects that are eligible for duty
free from US$500 to US$1000
5.5.2 Agriculture
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1. Guaranteed input tax claim for four years prior to commencement of
production for Vatable agricultural businesses
2. Zero rating agricultural products and supplies when exported
3. VAT deferment on importation some agricultural equipment and machinery
4. Income tax at reduced rate of 10%
5. Farm improvement allowance at 100% on fencing, brick or stone wall and an
allowance of K10 million for farm occupied by farm workers
6. Farm works allowance at 100% for the full cost of stumping and clearing,
works for prevention of soil erosion, boreholes, wells, aerial and geophysical
surveys and water conservation.
7. Dividends paid out of farming profit are exempt from tax for the first five
years the distributing company commences farming
8. Development allowance is given for any person who incurs expenditure on the
growing of tea, coffee or banana plants or citrus trees or similar plants or trees.
An allowance of 10% of such expenditure shall be deducted in ascertaining the
gains and profits of that business
9. No Import Duty on irrigation equipment and reduced Duty Rates on imports of
other farming equipment
10. Reduced Customs Duty at 5% on pre – mixes, being vitamin additives for
animal feed.
11. Zero-rate Hammer Mills of HS code 8436 1000
5.5.3 MANUFACTURING
1. Refund of Zambian VAT on export of Zambian products by non – resident
businesses under the Commercial Exporters Scheme
2. Guaranteed input tax claim for two years prior to commencement of
production
3. Income from chemical manufacturing of fertilizers is taxed at a reduced rate of
15%
4. Capital allowances on industrial buildings used for the purposes of
manufacturing shall be entitled to a deduction of 10% in case of low cost
housing and 5% for other industrial buildings
5. Persons who incur capital expenditure on an industrial building are entitled to
claim a deduction called Initial Allowance at 10% of the cost incurred in the
charge year in which the industrial building is first brought into use
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6. Any person who incurs capital expenditure on an industrial building is entitled
to an investment allowance at 10% of such an expenditure in the first year
that the building is used for manufacturing purposes
7. Import Duty on PVC lining and eyelets used in the manufacture of shoes has
been reduced to 5%
8. Import Duty on semi refined wax and cerechlor used in the manufacture of
paint, and on tapioca starch with dextrose powder which is used in the
manufacture of biscuits has been reduced to 15%
9. Import Duty on various textile machinery has been reduced to 0% and all
woven fabrics of polyester imported for further processing, all imported
sewing threads and gray fabrics has duty reduced to 0%
10. Reduced Import Duty on the following inputs used in manufacturing:
a. Crude Coconut(copra) oil of subheading 15131100 to 5%;
b. Plates Sheets, film, foil and strip of unsaturated polyesters of heading
3920.63.10 to 5%
11. Suspension of Import Duty on machinery, equipment and capital goods for
assembling of motor vehicles, trailers, motorcycles and bicycles
5.5.4 Tourism
1. Zero Rate of VAT on tour packages throughout Zambia
2. Zero Rate on other tourist services provided to foreign tourists and visitors
other than those included in tour packages
3. Refund of VAT for non – resident tourists and visitors on selected goods
4. No import VAT on all goods temporarily imported into the country by foreign
tourists
5. Capital allowances at 50% of the cost of plant and machinery
6. Investment allowance at 10% of the cost of an extension to an hotel (being an
industrial building)
7. 5% wear and tear allowance to an extension to an hotel (being an industrial
building)
8. 10% initial allowance on an extension to an hotel (being an industrial
building) in the year the building is first brought into use
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9. Remove the 5 percent customs duty on helicopters and micro-lights for use in
the tourism sector
5.5.5 Mining
1. Guaranteed input tax claim for seven years on pre – production expenditure
for exploration companies in the mining sector
2. 10 year period carry forward of Tax losses (5 years for Prospecting and
exploration companies)
3. Any mining company holding a large – scale mining license carrying on the
mining of base metals is taxed at 30%
4. Other mining companies are taxed at 35%
5. Dividends paid by a company holding a large – scale mining license and
carrying on the mining of base metals is taxed at 0%
6. 25% Capital allowances on Mining Equipment and related expenditure when
assets brought into use. This is with effect from 2012.
7. The debt equity ratio has been reduced from 2.1 to 3.1, to encourage further
investment in the Mining Sector
8. Remission of duty on special mining vehicles and machinery specified as:
a. Dump trucks-off highway 87042300
b. Mine –Locomotives 84285000
c. Transmission or conveyor Belt 59100000
d. Conveyors 842831, 32, 33 – 84289000
9. Property Transfer Tax on transfer of mining rights is 10%
10. Mineral Royalty is 6% on all minerals (Base, precious and gemstones)
5.6 Zambia Development Agency
The formation of the Zambia Development Agency (ZDA) and the Citizen Economic
Empowerment Commission (CEEC) has been a huge milestone in the development
and promotion of entrepreneurship and entrepreneurs. The Zambia Development
Agency (ZDA) was established in 2006 by an Act of Parliament and became
operational in January 2007 after the amalgamation of five statutory bodies that
hitherto operated independently to foster economic growth and development by
promoting trade and investment through an efficient, effective and coordinated private
sector led economic development strategy. These institutions were the Zambia
Investment Centre (ZIC), Zambia Privatisation Agency (ZPA), Export Board of
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Zambia (EBZ), Small Enterprise Development Board (SEDB) and Zambia Export
Processing Zones Authority (ZEPZA). The Act gives powers to the ZDA in key areas
of trade development, investment promotion, enterprise restructuring, development of
green fields’ projects, small and enterprise development, trade and industry fund
management, and contributing to skills training development.
5.7 The Citizen Economic Empowerment Commission
The Citizens Economic Empowerment Commission was established by the Zambian
Government through an act of Parliament Act No. 9 of 2006 with a mandate to
implement various economic empowerment programmes across the country. The
rationale of the CEEC is to promote the empowerment of citizens that have been
marginalized or disadvantaged and whose access to economic resources and
development capacity has been constrained due to various factors such as race, sex,
educational background, status and disability. In executing its mandate, the CEEC has
anchored its programs and activities around the nine pillars of empowerment which
include equity ownership management and control of companies. Citizen Economic
Empowerment Commission implements a policy of preferential treatment to
encourage local entrepreneurship through citizens-influenced companies (5 to 25 per
cent ownership), citizen empowered (25 to 50 per cent ownership) and citizen
motherland owned (50 plus one percent). Preferential Procurement, as provided for in
the Citizens Economic Empowerment (CEE) Act number 9 of 2006, is a measure
designed to broaden market access of the local enterprises so as to integrate them into
the mainstream economy. Preferential procurement is a key component in
empowering the Zambian Citizens. It is noted that government procurement accounts
for about 15% of the Gross Domestic Product (GDP). Both the private and public
sectors spend a lot of money on procurement of goods and services in the course of
their business activity, citizens have been constrained to effectively and meaningfully
participate due to large of support.
6.0
EXTERNAL
FACTORS
THAT
AFFEECT
SMALL
BUSINESS
ENTERPRISE
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There are various factors that affect the business either negatively or positively. These
factors may offer opportunities if positive and threats if negative. These section
considers external that may affect a business.
a) Economic and Demographic Factors
A free market economy is generally considered to be a favourable economic
climate. It forms the foundation of private enterprises advancement. The free
market does not however, in itself guarantee economic growth or successful
entrepreneurship. The following economic factors can either be detrimental or
beneficial to the advancement of entrepreneurship
i.
Economy Cycle
The economy can be in prosperity or boom, stagnant or recession,
recovery and stead. If an economy is in recession, the demand is
depressed, the economy is turmoil and marginal enterprises may not be
able to survive.
ii.
Inflation
High inflation rate leads to a decline in consumable or disposal
income. This may limit the implementation of innovative ideas as well
as economic activity. As February, 2016, the inflation rate in Zambia
was 22.9% according to Central Statistics Office. This has led to an
increase in the general price of goods and services.
iii.
Gross Domestic Product
A low or negative growth rate of Gross Domestic Product (GDP) has a
negative effect on the welfare of business and society as whole. In
Zambia, the GDP growth rate has been 7% on average for the past last
six years though for 2016, it is estimated at 3.5%. This will invariably
affect business adversely.
iv.
Monetary Policy
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A strict long term monetary policy coupled with high interest rates, has
a limiting influence on the funding of new enterprises. For the first half
of 2016, the interest rates were almost 40% after the Bank of Zambia
raised the Policy Lending Rate. Companies with debt will be the
hardest hit with this increase. Restrictions on forex can equally have
negative effects on the economy consequently affecting up- coming
enterprises.
v.
Legal restrictions
Legal restrictions and bureaucracy can arrest economic development
and suppress entrepreneurial initiative.
vi.
Unemployment
Unemployment leads to reduced income for the population as more
people’s sources of income are extinguished.
vii.
Wage rates
Where people get higher wages, they will be able to spend more on
goods and services thereby providing a market for the entrepreneur.
viii.
Demand and Supply
The higher the demand, the higher the price of goods and services thus
attracting more supply of goods and services by entrepreneurs.
ix.
Population distribution
Demography is the study of population in terms of size, density,
location, age, gender, race, distribution etc. Age and gender are issues
in entrepreneurial propensity. The population of a country has a
bearing on the profitability of business. A large population supports
business by providing a market.
x.
Income Distribution and occupation
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Income distribution and occupation affect business. Areas of high
income provide large markets for goods and services.
xi.
Fiscal Policy
The Tax policy of Government is crucial to the well-being of business.
A friendly tax environment will attract business and support
entrepreneurship. On the contrary, a very unfriendly tax policy can
hamper business.
b) Political and Legal System
The politicians often determine the legal and economic environment. Policies
made by the Government have a huge bearing on how business operates.
Governments need to create enabling environments for business to thrive. The
legislative arm of Government has the mandate to make laws. These laws can
have wide ramification as their coverage is wide ranging from Tax laws,
competition laws, industrial laws, labour laws etc. These laws affect business.
c) Religious Practices
Some religious practices have negative influence on business. E. g it would be
hard to open a butchery selling pork and pork products in a Muslim
community or in a Seventh - Day Adventist dominated area. Issues such as
colour, packaging, shape and scent may be influenced by religious beliefs.
Business Operations are equally affected by religious beliefs. For instance, it
may be offensive to keep a business open during weekends when it is expected
that all should be at church
d) Social-cultural environment
Social- cultural factors include; the cultural values, norms and traditional
practices of people, social classes, the geographic and age distribution of the
population, household size, education and so on. These factors have deep
influence on consumers’ preferences and fashion, shopping habits and
attitudes. Core values are deeply rooted and established within society and are
difficult to change. They may be perpetuated through family, church,
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education, and other institutions of society. Every entrepreneur is part of a
community. The social-culture of a community influences the views of the
members of that community as far as business and entrepreneurship is
concerned.
e) Ecological Environment
Ecology can be defined as the relationship of one organism to another and
their physical surrounding. To ensure a balance, certain laws must be
observed. Approximately, 90% of the Zambian household energy needs for
cooking and heating is derived from biomass in form of fuel wood.
Indiscriminate cutting of trees and shrubs result in exposure of the soil to rain
and wind erosion as well as low fertility. Disturbances in the ecological
environment such as mining in game reserve areas, massive construction of
buildings in water reserve areas, damming of rivers, deforestation through
charcoal burning, discharge of industrial affluent or waste etc may have far
reaching consequences for the future generations. The consequences of the
ecological imbalances may include price hikes, inflation, increase in
production costs etc especially in the primary industries like agriculture.
Another example could be the increased costs of purifying water for drinking
from a polluted river. Due to the importance the Government has attached to
balancing the ecology system, it is now a requirement by law to do an
environmental impact assessment before any major construction is done.
Zambia Environmental Management Agency is responsible for authorising
major constructions depending on the out coming of the environmental impact
assessment
f) Infrastructure Development
Infrastructure development includes power, transport network, communication
network, roads, utility facilities such as good drinking water, internet facilities,
hotel facilities, housing facilities etc affect how business operates. It may be
difficulty to establish a business if the infrastructure cannot support it.
g) Technological Factors
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The business world is affected to a very large extent by the technological
advances in place in a given country. The Worldweb, internet, phones, online
banking, etc have enhanced business. Some businesses are solely dependent
on internet connectivity and therefore its availability will be determined by the
presence of the needed technology. In Zambia, there are a lot of businesses
that have thrived on the technological advances. Examples include, Zoana
money transfer, Xapit by ZANACO, E-wallet by FNB, Airtel and MTN
mobile money, Real Time banking by most banks etc.
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