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Commerce, Trade and Industry
such as the increased cost of imported raw mate-
rials, in the face of a rapidly depreciating Zambian
Kwacha, a decline in export demand, and continued
stiff competition from cheaper imports.
The government has been working at expanding the
country’s manufacturing base by reducing the cost of
doing business through various initiatives. Currently,
the government is promoting the establishment of
multi-facility economic zones (MFEZ) by providing
fiscal incentives, quality infrastructure, and a favour-
able regulatory environment to developers of these
zones.
Nevertheless the manufacturing sector needs to
diversify to produce a wider variety of high quality
value added intermediate and final products princi-
pally for export markets. Engineering, Textiles, Wood
& Wood Products, Building Materials, Processed
Foods, Chemicals, Leather and Leather Products
and Handicrafts offer potential opportunities for just
such growth.
Local workers earning a living using their skills
Pepsi Factory-constructed by ZCON
INSTITUTIONS & POLICIES
Manufacturing incentives are extended in order to
foster a strong manufacturing sector with the in-
tention of achieving broad-based economic growth
and reducing the national dependence on imports.
Over the past several years, the government has
increased its efforts to provide an enabling environ-
ment for growth, and offers manufacturers a num-
ber of interesting incentives. Specific incentives are
detailed on the Zambia Development Agency’s web-
site: www.zda.org.zm.
Of importance to the manufacturing sector in Zam-
bia’s 2010 National Budget was the abolition of the
penal bond system applicable to manufacturers of
excisable goods, which will reduce the cost of doing
business. In addition, customs duty on the fertilizer
micronutrients of sulphur, zinc, iron, bentonite pas-
tilles, and manganese used in the blending of ferti-
lizer has also been removed. In addition, the supply
of paste and liquid polymers, which are used in the
manufacturing of polypropylene bags, has been ex-
empted from VAT.
Multi-Facility Economic Zones
Exhibiting the best features of Free Trade Zones,
Export Processing Zones, and Industrial Parks,
the development of Multi-Facility Economic Zones
(MFEZs), the specific geographical areas for both
export and domestic-oriented industries, with high
quality physical and social infrastructure in order to
attract investment into the manufacturing sector, act
as engines of economic growth.
Zambia’s MFEZs accommodate not only industries
but also a variety of other amenities such as recrea-
tion centres, shopping malls, educational centres,
and health facilities. Business regulations inside the
MFEZs are sufficiently flexible to provide a competi-
tive investment environment comparable to some of
the best in the world. The ZDA’s Multi-Facility Eco-
nomic Zones Division leads the implementation of
MFEZs in Zambia and is responsible for ensuring
efficient government approval procedures to stream-
line the setting up and administration of new busi-
nesses in these areas.
Specific incentives include:
• Zero percent tax rate on dividends for companies
operating in priority sectors and/or MFEZ under the
ZDA Act for a period of five years from the year of
first declaration of dividends
• Zero percent tax rate on profits made by compa-
nies operating in the priority sector and/or MFEZ for
a period of five years from the first year profits are
made. For years six to eight, only 50 percent of the