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Zambia Development Agency Africa’s New Frontier for Investments and Profits Zambia in the Region Area: 752,614 sq km Common borders with 8 (plus RSA) Population: 12.1 mil (est. 2007) Independence: 1964 Religion: 50-75% Christian, Muslim 24%, 1% indigenous Africa’s New Frontier for Investments and Profits Key Economic Indicators for 2009 GDP Growth 6.3 % US $ Exchange Rate 4,600 – 4,800 GDP per Capita - 2009 US $ 1,181 Inflation December 2009 9.9 % Total GDP in 2009 US $ 14.3 billion Africa’s New Frontier for Investments and Profits Selected input costsCosts Fuel US $ 1.42 per litre Electricity price of US $ 0.05 per kWh Water US $ 0.76 per m3 Industrial Land Rates US $ 10 per annum Fixed Charge and US $ 1.1 per hectare for land larger than 1 hectare Competitive local Labour Costs Wages, Minimum Annual Wage (40 hr week) US$ 2008 (PPP) Zambia 1,043 RSA 2,560 Angola 1,755 Malawi 511 Tanzania 1,688 Africa’s New Frontier for Investments and Profits Diversification from Copper Exports Main thrust of diversification promotion of trade and investment of non-traditional exports (NTEs) NTEs account for 20 % of export earnings NTEs have grown by average 18 % in last 5 years Main NTE products are animal products, agricultural, manufactured goods, processed foods, gemstones, horticulture/floriculture, chemicals & pharmaceuticals, mining & engineering products. Non mining sectors contribute over 90% of the country’s GDP. Major contributing sectors are; agriculture, manufacturing construction, wholesale & retail trade. Africa’s New Frontier for Investments and Profits Transport Infrastructure By Road Existing road network connecting to all major ports in Southern Africa. Dar-es-salaam , Durban, Walvis Bay, Beira. A five and ten year plan to rehabilitate 38,763 km of roads exists and will cost an estimated US$ 1.2 billion By Air There are three major international airports. • Lusaka International Airport • Livingstone • Ndola By Rail Two major rail lines link the country to six major African sea ports: Dar-es-salaam, Beira, East London, Port Elizabeth, Durban and Cape Town Africa’s New Frontier for Investments and Profits Political situation..and Stable Country 45-year strife free political stability with no ethnic division. Democratic Rule Positive and business friendly macro economic environment Investment security and guarantee – no expropriation Favorable business environment that benchmarks the best among LDCs Efficiency of Government machinery Access to regional and international markets Infrastructure Human resource quality of life Africa’s New Frontier for Investments and Profits Regionally Connected International road highways link Zambia to all neighbours including Durban and Dar-essalaam ports Hub for central southern Africa Regional market 600 million – COMESA and SADC R Direct road network from Durban to Cairo via Zambia Direct road and rail network from Durban and Dar-es-Salaam Africa’s New Frontier for Investments and Profits Zambia Reform Process Doing Business, Reform process Reforms Transaction Costs Infrastructure Cost of doing business Full range of policy, institutional, regulatory framework, and business regulations Road Sector Investment Program US$1.2 bn Airport improvement Power – Grid code Rules, regulations & procedures Reducing complexity of procedures - tax, licences, customs, incorporation, labor Public Diversification Lands, ZRA, Immigration, PACRO, Chiefs Trade & Investment facilitation; Customer facing priority sectors, MFEZ & Industrial Parks Reform is on-going – Even if you on right track, if you not move you will be run over Benchmarking Improve investment environment Africa’s New Frontier for Investments and Profits 9 Pillars of Reform 5.0% 0.8% 0.4% 2.7% 1964-1974 1975-1982 1983-1990 0.6% 1991-2000 2001-2009 Restructuring the economy & Diversification Ease of Doing Business / Investment climate Macro economic / Fiscal stability Economic Empowerment Africa’s New Frontier for Investments and Profits Zambia Ranking DB out of 181 Indicators 2008 2009 2010 Measures to Improve Rankings Overall Ranking 116 99 90 Starting a Business 82 72 94 Dealing with Construction Permits 148 146 151 Streamlining Exercise in progress Registering Property 125 94 94 Computerization of Registering Property Legislative amendment to register title deed Getting Credit 97 68 30 Credit Bureau / CGS / Single Treasury Protecting Investors 64 70 73 Paying Taxes 30 39 36 Trading Across Borders 160 157 157 One Stop Border/ Border Facilities - PPP Employing Workers 121 129 116 Greater flexibility – Protect Workers not Jobs Enforcing Contracts 86 88 87 Commercial Court - strengthen Closing a Business 84 83 83 Companies Act - Insolvency Provisions SADC Countries comparison DB… World Bank Country Manager, Kapil Kapoor. “This progress is a result of sustained effort by the Government to improve the regulatory environment for businesses and positions Zambia ahead of many African economies”. “However, it is important to recognize that reducing the ease of doing business is a beginning and a starting point to reducing the cost of doing business and increasing competitiveness”. He encouraged the Government build on these good results by pressing ahead with effective reforms in other key areas such as transport, telecommunications, energy and the financial sector in order to improve the broader business environment, which is crucial to achieving the Vision 2030 Limitless Opportunities… Prioritisation of Sectors High Priority 3 Priority 2 Priority Sectors Priority 1 Industrial Minerals Engineering products Energy Retail and Value Addition trade (minerals & agro) Mining Tourism Horticulture Agriculture Investment attractiveness Gemstone Urban Infrastructure Medical / Health Education and Skills Financial &Service Rural Infrastructure High Low Developmental impact 1. Value addition – agro/mining 2. Fertilizer & cement production 3. Timber 4. Leather processing 5. Agro processing 6. Tourism 7. Heavy / Engineering Industry 8. Energy 9. Telecommunications, ICT 10.Electronics, assembly 11.Pharmaceuticals 12.Non metallic mineral products 13.Health / medical / education Africa’s New Frontier for Investments and Profits Zambia Export Response Export Growth 6000 5000 US$ million 4000 NTEs 3000 Metals Total Exports 2000 1000 0 Since 2000 2001 Copper > 101% NTE - trippled 2002 2003 2004 2005 Year 2006 2007 2008 2009 Africa’s New Frontier for Investments and Profits Exports by Products, 2008 0.0% 10.0% Copper Wire 50.0% 8.0% 3.8% Electric Cables Cotton yarn 40.0% 6.5% Burley Tobacco Fresh Flowers 30.0% 17.6% Cane Sugar Cotton Lint 20.0% 5.9% 2.6% 0.8% Fruits & vegetables 2.9% Gemstones 3.5% Others Africa’s New Frontier for Investments and Profits 48.4% 60.0% FDI Annual Trend Source: BOZ, CSO, ZDA – FDI & Investor Perception Survey 2007/08, and WIR 2009 FDI by Economic Sector, 2007 US$ million Other 145.3 Construction 9.2 Real Estate 2.9 Agriculture 3.8 Tourism 12.7 Wholesale & Retail 80.4 Transport & communication 67.8 Manufacturing 108.7 Bank & Non Bank 111.5 Mining 781.6 0 100 200 300 400 500 600 700 800 900 Source: BOZ, CSO, ZDA – FDI & Investor Perception Survey 2007/08, and WIR 2009 Framework for Investment ZDA Act Fiscal Incentives – 0% corporate tax, first 5 years, graduated thereafter 0% import duty on capital items Deferment of VAT Facilitation services – Primary and other secondary licenses Land Utilities Work Permits Selection of local Joint Venture partners Large Projects – Investment Implementation Agreements Mutual obligations of parties Incentives, approvals and waivers Protection against nationalisation Legal & regulatory environment constantly improved upon Main Business Taxes Corporate tax General Mining Agriculture & NTE 35 30 15 Withholding Tax 15 Percent Value Added Tax 16 Percent Import Duties Priority Sectors (corporate tax New investment) Capital Goods & Raw Materials Intermediate Finished products 0 – 5% 15 % 25% 0 – 5 yrs =0% 6 – 7 yrs = 50% of rate 8 – 9 yrs 75% of rate Africa’s New Frontier for Investments and Profits Portfolio investment via Lusaka Stock Exchange – Dual listing on JSE – 17 companies, US$ 52 millionNanga Africa’s New Frontier for Investments and Profits Indirect routes via listed entities with significant Zambia operations on other exchanges Africa’s New Frontier for Investments and Profits Joint ventures with existing Zambian businesses Oil Exploration, Mining, Construction, Tourism Africa’s New Frontier for Investments and Profits Top Investors in Zambia.. www.zda.org.zm A-to-Z information on the Zambian market Guidance through the entire investment process and aftercare Provision of matching Zambia partners and building contact networks Global export market information & product development SME & business development services Contact Details: Zambia Development Agency Privatisation House Nasser Road P.O. Box 30819 LUSAKA Tel: +260 211 220177 Fax: +260 211 225270 Email: [email protected] Africa’s New Frontier for Investments and Profits