Zda Spotlight : Issue 1

Zda Spotlight Issue 1

Zambia Development Agency

March 23 2009

Inside this issue:

U$10M CELL PHONE PLANT OPENED

TATA buys Kabwe Tannery

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Government To Support Private Investors

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SME’s On The Match

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Survey Reveals Bright Economic Future

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Citrus Plantation in the Offing

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COMESA Well Endowed With Natural Resources

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Business Development Services Set To Expand

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Points of Interest • “Keeping Zambia competitive begins with keeping our economy growing. And our economy can only grow when a lot more Zambians invest in the domestic economy,” • 15% cash rebate for qualifying expenditure in movie making in Zambia • A significant 82 percent of the companies that participated in a survey indicated that they would expand their businesses which points to investor confidence in the domestic economy

Quote Investors have very short memories. R. Abramovich

stressed that the government would continue to create a conducive and competitive environment for the private sector to thrive in various sectors of the economy. “Keeping Zambia competitive begins with keeping our economy growing. And our economy can only grow when a lot more Zambians invest in the domestic economy,” he said. President Banda said Zambia now boasted of home grown corporations which he said were among the largest in Africa.

President Rupiah Banda

than 200 Zambians in various capacities. Among them

A U$10 million mobile phone manufacturing plant, known as M-mobile Telecommunications Zambia Limited (M-Tech), has officially opened in Lusaka, the first cellular phone manufacturing company to open in the country. President Rupiah Banda, who officially launched the plant , said the company would employ more

are engineers, technicians and many others in various technical fields. He was happy that the company would benefit Zambians through employment creation, technology transfer and human resources development among other areas. He

The government, he added, was determined to continue facilitating actual production of mobile phones as this would greatly help reduce the cost of communication in the country. He said this was aimed at adding value to the country’s economic development process, which was a significant step towards the realization of Zambia’s Vision 2030 of transforming into a middle-income country.

ZDA Approves U$179.3 Investment Thirty six applications for investment Licence have been approved from January to date with a planned investment value of U$179.3 million. In March twenty four applications were approved with a total value of U$140 million of planned investment mostly in manufacturing, transport and tourism

sectors The approved projects are expected to create about 1,500 job new opportunities. In month of January 2009 twelve applications were approved with planned investment of U$39.3 million. Manufacturing accounted for ninety percent of the approved projects while the

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rest of the applications were from agriculture, health and tourism sectors. Once implemented the projects will create 607 jobs. The planned investment in various sectors of the economy is as a result of the favourable investment climate resulting from Government’s sound economic policies.

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TATA Buys Kabwe Tannery TATA International through its local subsidiary, TATA Zambia, has purchased Kabwe Tannery at a consideration of US$ 1,165,000 for core assets only. TATA International was selected as a preferred investor owing to its vast experience in the tannery business. Speaking at the signing ceremony on the Sale Agreement, Ministry of Commerce, Trade and Industry Permanent Secretary, Dr. James Mulungushi, said the tannery had struggled to reach full production due to under-capitalisation hence the sale of assets. Dr Mulungushi said owing to the insolvency of the tannery, a scheme of arrangement had been drawn up to address the liabilities of the company that would ensure that creditors and employees are paid in due course. The Company has 32 employees who have not been paid their salaries for over 50 months now. Tata plans to invest a further U$3.3 million and to create supplier opportunities for local hide producers.

Challenges Of Doing Business Land acquisition, obtaining electricity connection, and immigration permits are major challenges in the process of establishing new businesses in Zambia, say most investors talked to by the Zambia Development Agency (ZDA). During its monitoring exercise of companies holding investment Licences, ZDA learnt that some companies were forced to delay implementation of projects due to these hitches. One company indicated that it took about 15 months to acquire land while another waited for six months for installation of electricity. A number of companies also indicated that they experienced delays in getting permits for their expatriate staff while others were still in discussions with the Immigration Department. Through the monitoring exercise, ZDA dialogues with investors on various issues related to the investment climate in Zambia. The monitoring exercise is aimed at assessing progress made in terms of fulfilling initial investment and employment creation pledges.

Government To Support Private Investors Government has pledged to provide facilities that would help private investors to set up their investment and create jobs in the country. Minister of Commerce Trade and Industry, Felix Mutati said government has nine companies which are introducing a new dimension

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to its diversification efforts. He was speaking when he met investors from Canada, India, and Malaysia. Mr. Mutati said government will make a practical process of translating initiatives into investments and agree on a clear roadmap on what should be done at the end of the discussions with the investors. He said the investments will be able to help Zambia achieve the target of five per cent economic growth this year. Mr. Mutati said the investors were willing to form a joint partnership with Zambians to set up investments in the country. “As government, we are providing a facility to assist these investors to put up investment and they will also assist us to create jobs,” he said. He said government would minimise risk factors in order to provide the investors with potential partners, adding that government would make sure that this programme reaches its logical conclusion. At the same occasion, Ink-Media Chief Executive Officer, William Plant, a Canadian investor, said it was essential that a computer assembly plant is established in Zambia because the country was centrally located. Mr. Plant said Ink-Media is trying to help bridge the digital divide by bringing the assembly of computers to Zambia. He stressed that Ink- Media was creating a plant in Zambia to stimulate the people to develop an interest in using computers.

SME’s On The March…. Despite the global credit crunch, a total of 33 applications by Micro and Small Enterprises (MSEs) were approved by the ZDA in March 2009, representing realized investment of K 1.12 billion with a further K 587 million planned investment. These MSEs currently employ 186 workers and are expected to create an additional 337 new jobs over the next two years. “This is a positive development further emphasizing the critical role MSEs are expected to play in employment generation in Zambia,” says ZDA MSE Director Windu Matoka. ZDA will provide business development services, help improve entrepreneurship skills and improve the ability to access Citizen's Economic Empowerment Commission (CEEC) and other funding by these MSEs. The approved MSEs are in engineering products, food processing, candle manufacture, carpentry, veterinary services, and transport.

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Credit Guarantee Scheme Coming… The Minister of Commerce Trade and Industry, Mr. Felix Matati, is expected to soon launch the Credit Guarantee Scheme (CGS) for MSEs. The CGS is expected to provide cover, on a portfolio basis, to participating financial institutions and thus broaden access to credit by capturing entrepreneurs with viable business ideas but could previously not access credit due to inadequate collateral arrangements.

Business Incubator Programme On Track With the support of Finland, plans are advanced for designing and launching a national business incubation programme with the preliminary studies finalized. The national business incubator programme is expected to be a self financing, public-private partnership responding to the business service needs of early stage MSEs.

Linking SMEs to TNCs A business linkage programme to link SMEs to trans-national corporations as a way of developing SME’s market access is being undertaken with the support of UNCTAD. The plan is to link various corporations in manufacturing, service and agriculture with SMEs. Sensitization meetings have been held with various corporations and after product identification, sensitization will be held with SMEs.

Skills Development Continues… In the first week of March, ZDA conducted a training on preparation of business proposals for twenty Lusaka entrepreneurs. The training was over five days and it is expected that the training will enhance the ability of these MSEs in planning their operations and more importantly sourcing business funds. The event was organized on a cost sharing basis with the SMEs.

ZDA Partners Goldberg Associates ZDA has partnered with Goldberg Associates of the United Kingdom in facilitating Zambian transactions by creating a bridge between international suppliers of finance, goods, and services and Zambian businesses.

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Survey Reveals Bright Economic Future

COMESA Well Endowed With Natural Resources

Results have been released from a study entitled “The Economic Impact of Direct Investment on the Zambian Economy.” The study highlights findings from the Direct Investment Impact Survey (DIIS) conducted by ZDA with Bank of Zambia and Central Statistic involvement and the support of the European Union’s Capacity Building for Private Sector Development.

COMESA Region is well endowed with natural resources, including fertile soils, large water resources, oil, gold ,diamonds and copper in addition to more than half of the world’s cobalt and manganese and more than 80% of the world’s reserves of chromium and platinum and rich mineral deposits. In a presentation to the second COMESA Regional Investment Conference (RIA) held in Cairo, Egypt, Mrs. Heba Salama, the COMESA RIA Manager, said these resources have without a doubt anchored national development efforts and have been the focus of regional integration efforts.

The survey results, from the companies covered in the sample were consistent with other studies and revealed significant contributions to the economy, in billions of Kwacha and notable expenditure in Corporate Social Responsibility activities. A significant 82 percent of the companies that participated in the survey indicated that they would expand their businesses which points to investor confidence in the domestic economy while other results revealed that a bright economic outlook is envisaged with 77 percent of respondents saying they expected Zambia’s economic future to be bright. Policy makers and public officers are expected to use the findings in the study to present an effective argument for direct investment across all sectors in order to promote economic growth and development, ultimately impacting on government’s major challenge of reducing poverty.

Citrus Plantation In The Offing Plans are underway to develop a Citrus Plantation with a processing plant on the border of Mongu and Senanga districts in the Western Province. The setting up of the plantation and the processing plant is an initiative of the local and provincial administration with the blessings of the Barotse Royal Establishment (BRE) in order to reduce endemic poverty in the province. A ZDA team that visited the area together with the Senanga and Mongu district officials recommended that the area should immediately be transformed from traditional land to state land and for a technical report to be submitted to the ZDA by the project initiators, in conjunction with the Ministry of Agriculture and Co-operatives, to ensure that the project attains full implementation. This will facilitate the preparation of a project proposal to attract investors in the area.

She said despite the adverse effects that the global financial crisis may have on the COMESA Region in the short term; the impact would not be as heavy as the developed economies. Mrs. Salama called for lower costs of operations for companies to keep afloat. The launch of the COMESA Customs Union this year would be another step in the integration agenda after the region attained the Free Trade Area, she added. The establishment of a COMESA Customs Union is expected to enhance intra and extra COMESA trade. It will also create a wider customs territory that is likely to attract investors in the region and see an increase in cross border investments. COMESA’s ability to increase FDI has improved and In fact has been very encouraging since the COMESA accounted for 40% of FDI flow into Africa in 2007. This was due to the fact that most of the COMESA countries have opened up to investors. Price controls have been abolished and the private sector has been accorded a more active and prominent role in the economy.

ZDA Gets New Board Members New Board Members have been appointed to the ZDA Board by Government. The new Board members are Mr. Likolo Ndalamei, Secretary to the Treasury who has replaced Mr. Evans Chibiliti; Dr James Mulungushi, Permanent Secretary Ministry of Commerce Trade and Industry, replaces Mr. Davidson Chilipamushi, while Dr Simon Mitti, Permanent Secretary Science and Technology takes over from his predecessor, Dr. Buleti Nsemukila. Others who have been appointed are Dr. Goldwin Beene, Permanent Secretary Mines and Mineral Development, who takes over from Mr. Leonard Nkhata, Dr. Winnie Mwenda, Permanent Secretary Labour and Social Security, replaces Mr.

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Ngosa Chisupa while Mr. Teddy Kasonso, Permanent Secretary, Ministry of Tourism and Natural Resources replaces Mrs. Mukuka Zimba. The Board Chairman , Mr. Luke Mbewe, has since sent a message of gratitude to all former Board Members for their commitment and work particularly in the establishment phase of the Zambia Development Agency.

Movie Making Set to Boom With the announcement in the National Budget of the 15% cash rebate for qualifying expenditure in movie making in Zambia, it is expected that once passed, this will be a big news item for the movie making industry. It is expected that this measure will put Zambia in the same standing as countries that offer actual cash grants and upfront investments to entice producers from countries such as Canada, New Zealand and Ireland. With all the scenic sites and this incentive Zambia is well positioned to become a movie making centre.

‘Incentivizing” New Industrial Park Developers With the incentive schemes announced in the 2009 National Budget for developers of industrial parks, the developers costs are expected to be lowered thus creating an impetus for setting up new industrial zones country wide. Fiscal incentives hitherto were not applicable to MFEZ and industrial Park developers but this new budget measure once approved is expected to boost interest amongst potential industrial park developers.

Zambia To Host North South Corridor Conference Zambia is set to host a high level conference on the North South Corridor on 6 to 7 April, 2009 in Lusaka. The North South Corridor Pilot-Aid-for-Trade Programme is a joint COMESA-EAC-SADC initiative that aims to reduce the time and cost of road and rail transport on the corridor spanning eight countries. The conference aims to secure donor, IFI and private sector Aid-for-Trade to finance the removal of infrastructural bottlenecks and secure commitments for members of the three regional blocks to address regulatory and administrative constraints blocking expansion of trade and economic growth.

Zambia Development Agency P.O Box 30819

Events

Nasser Road

Enhancing Zambia Development Agency’s Capacity to Facilitate Investors and Investment Workshops and Validation Meeting

Lusaka, Zambia Tel: 260-211-220177

Proposed Dates

Fax: 260-211-225270 E-mail: [email protected]

Eastern Chipata 1-2 April 2009

Website: www.zda.org.zm

Western Mongu 7-8 April 2009 North Western Solwezi 15-16 April 2009 Luapula Mansa 21-22 April 2009 Northern Kasama 27-28 April 2009 Central Kabwe 4-5 May 2009 Copperbelt Ndola 7-8 May 2009 VISION “To become a world class Agency for the promotion and facilitation of economic development.”

Mobilisation of validation meeting (Lusaka) 15 May 2009 Validation meeting 26-28 May 2009

Zambia Development Agency Power In Numbers Sensitisation on Small Aggregation Initiatives (SAIs) has been conducted for welders from Lusaka’s Kalingalinga compound and carpenters from Kalingalinga and Mandevu compounds and various entrepreneur groups on the Copperbelt. The SAIs encourage entrepreneurs involved in complimentary products to work in organized groups and pool their resources together, share common facilities so as to improve productivity. It is envisaged that once organised, the SAIs would be assisted in procuring asset finance and technology to improve product quality and exhibition facilities. Marketing support would also be provided to these SAIs. This initiative is to be extended to welders in Garden compound in Lusaka, and Southern Province. A similar initiative is being contemplated for the owner-driver bus concept.

Business Development Services set to Expand The Business Development Services (BDS) Voucher Programme has issued a total of 60 vouchers with a value of K300 million. This has been done for SMEs who are members of ZNFU and ZCSMBA in Petauke, Mumbwa, Kasama and Livingstone. The BDS is a nonfinancial intervention designed to assist SMEs improve their business practices and contribute to poverty alleviation. It is sponsored by Finland, Netherlands the Government of Zambia and ILO. From January 2009, the BDS Programme is to be rolled out to 16 additional districts that+ include Kabwe, Kapiri Mposhi, Mufulira, Solwezi, Mkushi, Monze, Mazabuka, Choma, Mansa and Chipata. The BDS Programme augments the CEE Fund in that it helps SMEs build capac-

ity to access CEE funding.

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Skills Training Continues.... In the third week of March, Gender in Development Division (GIDD) in conjunction with ZDA conducted a training programme on entrepreneurship & business for MSEs in Chipata. The programme was also conducted for women living with HIV in Chelstone, Lusaka; farmers in Nega Nega, and ZESCO retirees in Livingstone.

Zambia Development Agency The ZDA was established in 2006 by an Act of Parliament and began operating in January 2007 after the amalgamation of five agencies 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 agencies were the Zambia Investment Centre, Zambia Privatisation Agency, Export Board of Zambia, Small Enterprise Development Board and Zambia Export Processing Zones Authority.