Deloitte Au Aas Doing Business Zambia 13 PDF

Doing Business
in Zambia
Aunique flavour
March 2013
Table of contents
1. Forward
2. Introduction
3. High-level overview of Zambia

5
Introduction 5
Political and judicial environment
7
Economic environment
8
- Overview
8
- Mining
13
- Agriculture
16
- Energy
20
- Financial services
24
- Tourism
30
- Transport
32
- Telecommunications
34
Stock exchange
37
4. General business regulations
Company registration
ZDA Investment license
Exchange Controls
Employment permit
Temporary employment permit
Sector specific permits
Minimum wages and conditions
of employment
Social security
Mergers and acquisitions
Accounting and auditing
39
39
42
42
43
43
44
46
46
47
48
5. Taxation
50
Introduction 50
Tax administration
50
PAYE 51
Company Tax
52
WHT 55
Capital Gains Tax
55
VAT 56
Customs & Exercise
57
PTT 58
Investment incentives
59
Company vs. Branch
62
6. About Deloitte
Theglobal firm
Deloitte in Zambia
63
63
64
7. Key Deloitte contacts
65
8. Glossary of terms
66
Doing Business in Zambia Aunique flavour
1. Forward
Iam delighted to present thefirst edition
of Doing Business in Zambia, which Itrust
will be handy for businesses and individuals
seeking anunderstanding of theZambian
business environment.
Zambians economic performance over
thepast decade has been impressive, driven
by:
Improved macro-economic management.
This has resulted in general economic
stability in contrast to pre 2000 years of
significant foreign exchange rate volatility,
high inflation, rapid currency depreciation
and high interest rates.
Low debt levels. In 2005, Zambia qualified
for significant debt relief under theWorld
Banks Highly Indebted Poor Countries
(HIPC) debt relief initiative. This has
provided thecountry amajor impetus
for sustained economic growth. GDP
now stands at approximately US$20
billion, nearly double what it was in
themid-2000s.
Aresurgence of themining industry,
propelled by increased global demand for
metals, particularly in China. Theoutlook
for mining looks bright, with sector
growth expected to accelerate over
thenext three to four years. Based on
current pipeline of major investments,
Zambias copper output may almost
double by 2016.
Chisanga Chungu
Managing Partner
cchungu@deloitte.co.zm
Zambia has undergone

anunprecedented period
of robust economic growth
over thepast several years,
atrend which appears set to
continue
Looking to thefuture, Isee Zambias

economic outlook as promising. According
to theEconomist Intelligence Unit (EIU),
Zambias economic growth trajectory
is expected to continue at arobust
annual rate of about 7% over theperiod
2013 to 2016. Theone significant
bottleneck to Zambias future economic
growth is therelatively underdeveloped
infrastructure particularly in thepower
and transport sectors. Recognising this
challenge, theZambian Government
has embarked on asignificant 5 year
investment program, which should assist
un-lock Zambias economic growth
potential:
Road infrastructure is projected to

improve significantly as afive-year
US$5.6 billion project to upgrade
approximately 8,000km of road
network (20% of thecountrys road
network) is implemented, under
theLink Zambia 8,000 Programme.
As Ipresent our first edition of this
booklet, Ithank all theDeloitte professionals who have worked tirelessly and
taken time to share their insights.
Based on current planned projects,

Zambias power generation capacity
could increase to approximately 4,700
MW over thenext 5 years, from
thecurrent c.1,800MW.
2. Introduction
Purpose of booklet
Theprimary purpose of this booklet is to
provide potential investors, businesses and
interested individuals with information
fundamental to doing business in Zambia.
Theinformation we present in this booklet
is intended to be aguide and accordingly,
is not exhaustive.
Deloitte section of this booklet.

Finally, this booklet is necessarily based
on conditions existing at thedate of
publication and will continuously evolve as
changes occur in theZambian economic
and regulatory environment.
Readers are strongly advised to seek

professional advice prior to relying on
any information contained herein. To
contact Deloitte in Zambia please refer to
theContacts section of this booklet. For
information on how Deloitte can assist
you in Zambia including details of our core
service offerings, please refer to theAbout
This booklet is aimed at

providing information relevant
to Doing Business in Zambia to
potential investors, businesses
and other interested individuals
Located in Southern Africa, Zambia is alandlocked country covering

alandmass of approximately 750,000 sq. km, with apopulation of
some 13.6 million people
Zambia - Key statistics

Population (millions): 13.6 million
Land mass: 752,614 sq. km
Number of neighboring countries: 8
No. of ethnic groups: 72
Year attained independence: 1964
Business language: English
Primary exports: Copper & Cobalt
Capital City: Lusaka
Currency: Kwacha
Time zone: GMT + 2
Zambia is alandlocked country in
theSouthern Africa sub-region. It is
bordered by Tanzania in theNorth East,
Malawi in theEast, Mozambique in
theSouth-East, Zimbabwe in theSouth,
Botswana and Namibia in theSouth-West,
Angola in theWest and theDemocratic
Republic of Congo in theNorth.
It is estimated that approximately 40%

of thewater resources in Central and
Southern Africa are found in Zambia,
which gives thecountry immense
irrigation and hydro-power potential.
Zambias climate is characterised by three
distinct seasons: cool and dry from May
to August, hot and dry from September
to November and hot and wet from
December to April. Average monthly
temperatures remain above 20C for most
of theyear.
3. High-level overview
of Zambia
Zambias population is estimated at 13.6 million and comprises
approximately 72 Bantu-speaking ethnic groups
Introduction
Zambia was aformer colony of Great
Britain and attained political independence
on 24 October 1964. Zambias population
is estimated at 13.6 million, with
approximately 46% of thepopulation
representing anactive and productive
workforce, aged between 15 and 64
years.
Thepopulation comprises approximately
72 Bantu-speaking ethnic groups. Almost
90% of Zambians belong to one of nine
main ethno-linguistic groups namely;
Nyanja-Chewa, Bemba, Tonga, Tumbuka,
Lunda, Luvale, Kaonda, Nkoya and Lozi.
English remains theofficial business
language for thecountry.
Zambias key export products are copper
and cobalt. However thecountry also
has anumber of non traditional exports
including, sugar and sugar confectionaries,
dairy products, birds eggs and natural
honey.
Zambia has significant world class tourism
attractions including theVictoria Falls to
theSouth and 19 national game parks
strewn around thecountry.
Zambia
TheZambian Government is undertaking economic

diversification to exploit other components of thecountrys
rich minerals resource base
Zambias economy has experienced
strong growth in recent years, with real
GDP growth of more than 6% per year
for thepast five years. Privatization of
government-owned copper mines in
thelate 1990s relieved theGovernment
from sustaining mammoth losses
generated by theindustry and greatly
increased copper mining output and
profitability to spur economic growth.
In 2005, Zambia qualified for debt relief
under theHighly Indebted Poor Country
Initiative, consisting of approximately US$6
billion in debt relief. Nevertheless, poverty
remains asignificant problem in Zambia
with approximately 60% of thepopulation
below thepoverty line, despite astronger
economy. However, themedium-term
economic outlook appears favourable,
with inflation projected to remain in
single digits. Thecurrent inflation rate is
estimated at 6%.
TheZambian economy has historically

been based on thecopper mining industry.
However, theZambian Government is
undertaking economic diversification
to reduce theeconomys reliance on
thecopper mining industry and exploit
other components of Zambias rich
resource base by promoting agriculture,
tourism, gemstone mining, and
hydro-power. In 2012, theGovernment
raised USD750 million via aEurobond
issue to cover afunding gap for
infrastructure projects. Theinfrastructure
investment is expected to boost growth
by up to two (2%) percentage points per
annum.
The Zambian Government recently took
advantage of thecurrent low level of
inflation and relatively stable economy to
rebase theZambian currency by dividing
every denomination by 1,000, effective
1 January 2013.
Zambia operates amulti-party democratic system, with

Presidential and Parliamentary elections held every five years
ThePolitical and Judicial Environment
Political Overview
System of Government
Republic, Universal Suffrage
No. of parliamentary seats
158, with 8 members appointed by thePresident
Date of last Presidential election
September 2011
Year of next election
2016
Name of current ruling party
Patriotic Front
Duration of Presidential term
5 years
Current Head of State
Mr. Michael Chilufya Sata
Main opposition parties
Movement for Multi Party Democracy

United Party for National Development
System of governance and arms of

Government
Zambia is amulti-party democratic
country, with three separate arms of
Government namely, theExecutive,
Legislature and theJudiciary.
TheExecutive is headed by thePresident,
who has theprerogative to appoint
aVice President.
Both thePresident, who must belong to
aregistered political party, and members
of Parliament are elected via national
elections.
ThePresident is elected by popular vote
for afive-year term. Presidents are eligible
for amaximum of 2 five year terms.
Cabinet Ministers are appointed by

thePresident from thepool of both
elected and nominated members of
Parliament.
Parliament is headed by aSpeaker and
comprises 150 elected and up to 8
members nominated by thePresident.
TheZambian legal system is based on
English common law and customary law
principles.
TheSupreme Court is thehighest court
of appeal and is headed by theChief
Justice. Thejustices are appointed by
thePresident.
Zambias GDP now stands at US$20 billion, nearly double what

it was in themid 2000s
TheEconomic Environment - Overview
Recent trends in economic
performance
Since 2004, Zambia has undergone
improved macro-economic stability in
contrast to previous years of significant
foreign exchange rate volatility, high
inflation, rapid currency depreciation,
and high interest rates.
In 2005, Zambia qualified for
significant debt relief under theWorld
Banks Highly Indebted Poor Countries
debt relief initiative. TheHighly
Indebted Poor Countries relief has
provided
withtbb
amajor impetus
6-10
11-20Zambia
20-nl
for sustained economic growth. GDP
now stands at US$20 billion, nearly
double what it was in themid 2000s.
Historical GDP/inflation movement (%)
20
18
16
14
12
10
8
6
4
2
0
2004 2005 2006

Inflation
2007
2008 2009
2010
2011
2012
Real GDP Grow
Source: Bank of Zambia
9,0
8,5
Recent historical economic trends
8,0
7,5
Indicator
2008
2009
2010
2011
2012
Nominal GDP (US$ m)
14705
6,5
13398
16855
19742
20939
1540
1643
1737
13,0
13,3
13,6
7,0
6,0
GDP per capita

(US$ at PPP)
1408
1479
Population (m)
12,2
4,5
12,5
5,5
5,0
4,0
Forex rate (ZMK: US$)
4832
4641
2013f4796
External debt stock

(US$ m)
2975
3039
3689
2014f 5117 2015f
4619
50892016f
5442
Source: EIU, Deloitte analysis
800 000
8
9 000
8 000
Despite unfavourable global economic conditions, theZambian

economy has remained resilient, with annual GDP growth of 7%
for 2012
Despite therecent adverse global
economic conditions, Zambia has
continued to experience strong output
performance. In 2011, GDP grew by
6.8%. GDP growth has continued to
remain resilient with agrowth of 7%
forecast for 2012.
Inflation has declined significantly from
c.18% in themid-2000s to c.6% in
2012.
Further, Zambias exchange rate has
remained relatively stable over recent
years, with thecurrency depreciating
by less than c.7% between 2008 and
2012.
This low level of inflation and
relatively stable exchange rate
provided thecountrys Central Bank,
BOZ, anopportune time to rebase

theZambian currency by dividing every
denomination by 1,000, effective 1
January 2013.
In September 2012, Zambia had
asuccessful maiden entry into
theinternational bond market through
theUS$750 million bond issuance with
acoupon of 5.375%, one of thelowest
prices ever for aninaugural issue by
aSub-Sahara African country. Thebond
issue was 15 times over subscribed.
In order not to undermine long-term
debt sustainability, theGovernment
proposes to apply thebond proceeds
primarily on energy and transport
infrastructure as summarised in
thetable opposite.
Application of proceeds from theUS$750m issue
Project
Energy (generation and transmission)
255.0
Transport (road and rail)
430.0
Human capital and access to finance

Fees and transaction costs
Discount premium
Total
Source: 2013 Zambia Budget speech
US$ million
49.0
1.4
14.6
750.0
Zambias economic outlook appears bright, on theback of increasing

investments in various core sectors of theeconomy
Economic forecasts
Indicator
2012
2013f
2014f
2015f
2016f
Nominal GDP (US$ m)
20,939
21,528
23,713
30.1
31.9
GDP per capita

(US$ at PPP)
1 ,737
1 ,859
2,014
2,087
2,164
Population (m)
13.6
13.9
14.2
15.2
15.7
Forex rate (ZMK: US$)
5 ,089
5 ,712
5,787
5,756
6,135
External debt stock

(US$ m)
5 ,442
5 ,995
6,601
n/a
n/a
n/a: data not available Source: EIU, Deloitte analysis
Economic outlook
According to theEIU, Zambias economic
growth trajectory is expected to continue
at arobust annual rate c.7% over
theperiod 2013 to 2016. Thegrowth
will be led by increasing investments
in mining, agriculture, power and
construction:
- Growth in mining is expected to
accelerate in 2014-15 as investments
at theKansanshi, Lumwana and
Konkola mines, as well as First
Quantums new Trident mine,
approach completion.
- Agricultural production, especially of
thecountrys staple food, maize, looks
set to be strong in 2012-13 supported
by Governments continued efforts to
assist thesector yield results.
- Based on current planned projects,

Zambias power generation capacity
may increase to c. 4,700 MW over
thenext 5 years, from thecurrent
c.1,800MW.
- Road infrastructure is projected to
improve significantly as afive-year
US$5.6 billion project to upgrade
approximately 8,000km of road
network (20% of thecountrys road
network) is implemented, under
theLink Zambia 8,000 Programme.
- Construction growth will be driven
mainly by planned investments in
mining, power and theroad network.
10
20
18
16
14
12
10
8
6
4
2
0
Inflation is projected to average c.6.4% between 2013 and 2016,

down from 8.3% in 2011
2004 2005 2006 2007 2008 2009 2010 2011
6-10
11-20
2012
20-nl tbb
TheKwachas value is expected to be

supported by robust growth in copper
production levels over theperiod
to 2016, significant Foreign Direct
Investment (FDI) and public borrowing
(e.g. thesuccessful bond issue of
US$750 million in September 2012).
Forecast GDP / Inflation movement (%)
9,0
8,5
8,0
7,5
7,0
6,5
Inflation which averaged 8.3% in 2011,

is forecast to decline further, averaging
c.6.4% over theperiod 2013 to 2016
6,0
5,5
5,0
4,5
4,0
2013f
2014f
2015f
Inflation
2016f
Real GDP Grow
Source: EIU, Deloitte analysis
800 000
9 000
700 000
8 000
7 000
6 000
500 000
5 000
400 000
4 000
300 000
3 000
200 000
2 000
100 000
-
US$ / MT
MT
600 000
1 000
2008
2009
2010
2011
2012e
11
7 000
60
TheZambian Government aims to create some one million jobs over

thefive-year period to 2017, underpinned by theNational Strategy
for Industrialisation and Job Creation
As part of thenewly formulated
National Strategy for Industrialisation
and Job Creation, theGovernment has
identified four priority areas of focus
for growth and job creation; namely,
Agriculture, Tourism, Infrastructure and
Manufacturing. Under this initiative,
theGovernment aims to create
approximately one million new jobs over
thenext five years.
Jobs to be created over five-year period to 2017
Sector
No. of new
jobs over 5
year period
Agriculture
255.0
Tourism
300,000
Infrastructure (energy & transport)
110,000
Manufacturing
Tourism
90,000
300,000
Total
1,050,000
Source: 2013 Zambia Budget speech
12
6-10
11-20
11-20
20-nl tbb
2004 2005 2006
2007
2008 2009
2007
2008 2009
2010
2010
2011
2012
2011
2012
20-nl tbb
9,0
8,5
9,0
8,0
8,5
7,5
8,0
7,0
7,5
6,5
7,0
6,0
Themining sector is thecornerstone
of Zambias economy,
6,5
5,5
6,0
with copper and cobalt being themain
metals mined
5,0
5,5
4,5
5,0
4,0
2013f
4,5
TheEconomic Environment - Mining
2014f
2015f
2016f
4,0
2013f
2014f
2015f
2016f
Overview
700 000
800 000
8 000
9 000
7 000
8 000
6 000
7 000
5 000
6 000
4 000
5 000
3 000
4 000
2 000
3 000
1 000
2 000
1 000
500 000
600 000
400 000
500 000
300 000
400 000
200 000
300 000
100 000
200 000
2008
2009
Copper exports (MT)

2008
2009
2010
2010
2011
2012e
Average copper price (US$/MT)

2011
2012e
Historical cobalt exports and prices

7 000
60
6 000
7 000
5 000
6 000
4 000
5 000
3 000
4 000
2 000
3 000
1 000
2 000
1 000
50
60
40
50
30
40
20
30
10
20
2008
2008
2009
2009
Cobalt exports (MT)
2010
2010
2011
2011
2012e
10
-
Average cobalt price (US$/lb)
Source: 2008 to 2012 Budget speeches, BOZ, CSO reports,

Deloitte analysis
13
2012e
US$ / lb
US$ / lb
100 000
US$ / MT
US$ / MT
9 000
600 000
700 000
Theoutlook for mining looks bright,

with sector growth expected to
accelerate over thenext three to four
years. Based on current pipeline of
major investments, Zambias copper
output could almost double by 2016.
On thepricing side, although copper
prices weakened somewhat in
2012, most forecasts indicate that
copper prices will remain robust over
themedium term, driven by demand
in China.
800 000
MT
Zambia is one of theworlds largest

producers of copper and cobalt. It also
has considerable reserves of selenium
and silver, in addition to minor
quantities of gold.
Historical copper exports and prices
MT
Zambia has avast endowment of

metals, gemstones, industrial minerals
and potential energy resources
including coal, hydrocarbons, and
more recently, uranium.
MT
6-10
MT
-5
2004 2005 2006
2
0
With anumber of significant projects currently underway,

theoutlook for Zambias mining industry appears bright
Zambia: Key copper mining companies
Entity
Ownership
Konkola Copper Mines Plc
Kansanshi Mining Plc
Mine name /
location
Annual 2011
production
(MT 000)
Vedanta Resources Plc (51%)
Konkola
166
Zambia Copper Investments (28.4%)
Nchanga
ZCCM Investment Holdings Plc

(ZCCM-IH) (20.6%)
Napundwe
First Quantum Minerals Ltd (80%)
Kansanshi
ZCCM-IH (20%)
Mopani Copper Mines Plc
230
Sentinel
Glencore International Plc (73.1%)
Nkana, Mufulira
250
First Quantum Minerals Ltd (16.9%)

ZCCM-IH (10%)
Lumwana Mining
Corporation
Barrick Gold Corporation (100%)
Solwezi
146
NFC Africa Mining Plc
China Non Ferrous Metals Mining

Group Limited (85%)
Chambeshi
90
ZCCM-IH (15%)
Source: Respective company websites, Deloitte research
14
Based on current pipeline of major investment, Zambias copper

output may almost double by 2016
Key players in Zambias mining sector
Future outlook
Historically, thecopper mines in Zambia

were owned by thestate-controlled
Zambia Consolidated Copper Mines
Limited (ZCCM).
There are anumber of significant

projects currently underway, which are
expected to transform thecopper mining
landscape in Zambia:
By theearly 2000s, theGovernment had

privatised thestate-owned copper mines
in anattempt to return theindustry
to profitability and to boost economic
growth.
- Konkola Copper Mines, owned by

London listed Vendeta, is investing
US$180million at Nchanga, which is
expected to breath anadditional 25
years of life in themine.
Zambias mining sector is currently

dominated by entities owned by multinationals, as depicted in thetable opposite.
- Canadian-owned First Quantums

Sentinel project is expected to initially
produce 150,000 MT of copper
per annum, subsequently rising to
300,000 MT of copper per annum.
Thecapital cost is expected to be in
theregion of US $1 billion.
- Swiss-owned Mopani (Glencore) is
projecting anadditional 150,000
tonnes per annum and has finalised
afeasibility study on anew project to
invest anadditional US$1.5 billion in
Zambia.
Theabove projects, coupled with other

on-going investments in thesector,
could nearly double Zambias copper
output to c.1.6 million tonnes by 2016.
15
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Zambias agricultural sector, which- is 2003

dominated
by maize, accounts
2004 2005 2006 2007
2008 2009 2010
for afifth of national GDP
2011
TheEconomic Environment - Agriculture

Introduction
Zambia: GDP contribution by sector
Zambias agricultural sector accounts for

21% of GDP, with thebalance coming
from industry (35%) and services (44%).
21%
It is estimated that theagricultural sector

employs about 70% of thepopulation.
Thesector has immense potential
to drive economic growth, given
thecountrys vast expanses of arable
2010 2011 land
2012 and free flowing easily accessible
water supplies:
- Zambia has approximately 752,000
sq.km of landmass of which 58% is
arable. Yet only 15% of its of arable
land is currently used for farming.
- Small scale farmers supply about
70% of national crop output, despite
limited access to finance.
44%
Agriculture
35%
Industry
Services
Source: EIU
Zambias top five crops by production (MT 000)
Crop
2009 /
2010
2010 /
2011
%
change
Key crops produced
3 000
Maize
2795
3020
8%
Zambias primary agricultural output

crop is maize, thecountrys staple. This
is partly driven by:
Wheat
2 500
172
237
38%
253
147
-42%
Groundnuts
165
139
-16%
Soya beans
112
116
4%
2016f -
Generous guaranteed minimum

prices; and
- Provision of subsidised inputs to small

and medium scale producers.
Agricultural experts state that crop yield
9rates
000 are currently low compared to
global
standards.
8 000
3 500
Sweet
2 000
potatoes
1 500
1 000
Source: Ministry of Agriculture & Livestock statistics

Note:
500 In addition to theabove, sugar is another key agricultural
output for Zambia. Production is dominated by Zambia Sugar Plc,
which accounts for over 90% of thecountrys output. c.55% of
sugar production is exported, 10%, to theEU. Annual sugar output is
Maize tonnes.
Wheat
Sweet
estimated at 450,000
potatoes
7 000
6 000
2009 / 2010
MT
5 000
16
2010 / 2011
Groundn
4,000
30%
3,000
20%
2,000
10%
1,000
-
2003
2004
2005
2006
2007
2008
2009
2010
2011
0%
Anumber of initiatives are being implemented to

improve yields
21%
Government has embarked on anumber

of initiatives to improve yields, including:
44%
- Investment in training of small scale

famers;
5%
- Investment in research and

development; and
5%
- Promotion of local production of key

35%
inputs such as fertilisers and seeds.
Zambias top five crops by production (MT)

3 500
3 000
2 500
2 000
1 500
1 000
500
Maize
Wheat
Sweet
potatoes
2009 / 2010
20
17
18
Groundnuts
Soya beans
2010 / 2011
18
18
16
15
16
14
12
14
13
Zambias agricultural sector has anumber of players including

theMinistry of Agriculture and theFood Reserve Agency
Key players in Zambias agricultural

sector
Key players include:
TheMinistry of Agriculture &
Livestock: Sets policies and provides
farmer input support.
- Food Reserve Agency: Responsible
for crop marketing and food
storage.
- Commercial farmers: There are
various commercial farms in
thecountry including:
Zambias top 5 crops yield rates (MT per Ha)
Crop
2009 /
2010
2010 /
2011
% change
Maize
2.25
2.23
-1%
Wheat
6.33
6.31
0%
Sweet potatoes
3.57
3.23
-10%
Groundnuts
0.61
0.62
2%
Soya beans
1.80
1.90
6%
Source: Ministry of Agriculture & Livestock statistics
- Mpongwe Farms, adivision of

Zambeef which produces over
50,000 tonnes of crop (wheat,
maize, soya) ; and
- Zambia Sugar Plc, thecountrys
largest sugar producer with
amilling capacity of 450,000
tons per annum.
- Small-scale farmers i.e. those with
less than two hectares of land:
Theare fragmented and currently
account for c.70% of national
crop output.
- Various associations: These aim
to protect theinterest of their
members and include theZambia
National Famer Union and Zambia

Coffee Growers Association.
18
TheZambian Government recognises theagricultural sectors

significant potential and has implemented targeted incentives to
support growth
Government incentives
TheGovernment is keen to support
growth in theagricultural sector given
its immense potential to alleviate
poverty. 52% of theapproximately
one million jobs that theGovernment
targets to create over thenext five
years, are in theagricultural sector.
Promoting agriculture is one of
theGovernments key strategies to
diversify theeconomy from over
reliance on mining. Agriculture related
incentives include:
- Agricultural activities currently enjoy
concessionary corporation tax rates
of 10% compared to thestandard
rates of 30% 35%;
- Dividends from agricultural activities
are exempt from WHT for thefirst 5
years; and
- Designated farm blocks have been
set up that can be accessed by both
local and international investors.
These are pre surveyed blocks for
agro purposes where Government
is providing/installing basic
infrastructure such as roads, schools,
health facilities, dams, and electricity.
Anumber of crops have been
prioritized for investment including
coffee, cotton, tobacco, sugarcane,
pineapples, floricultural and
horticultural crops.
19
Zambias agricultural regions
Province
Annual rainfall
Suitable crop /
activity
Southern and
parts of Eastern
and Western
Less
than 800mm
Maize, cotton,
sesame, millet,
sorghum,
groundnuts,
beef, dairy
Lusaka, Central,
Southern and
Eastern
800mm
to 1,000mm
Maize, cotton,
soya beans,
wheat, beef,
dairy, vegetables,
tobacco
Western
800mm
to 1,000mm
Maize, rice,
cashew nuts,
cassava, millet,
vegetables,
timber, beef,
dairy, poultry, fish
Northern, Luapula,
Copperbelt,
North-Western
1,000mm
to 1,500mm
Maize,
pineapples,
millet, rice,
sorghum,
coffee, beans,
sugarcane,
cassava,
groundnuts and
fish farming
Source: Ministry of Agriculture & Livestock website
Zambias power output is dominated by hydro primarily generated

by thestate owned ZESCO
TheEconomic Environment - Energy
Power generation capacity
Power station
Current
capacity
(MW)
Projected
capacity
by 2018
(MW)
Estimated
completion
date
Type
Kafue Gorge
990
990
Existing
Hydro
Kariba North Bank
720
720
Existing
Hydro
Victoria Falls
108
108
Existing
Hydro
LHPC
55
300
2018
Hydro
CEC
80
880
2018
Gas/Hydro
Other ZESCO small

hydros
24
68
2018
Hydro
Kafue Gorge Lower
750
2017
Hydro
Kariba North Bank

Extension
360
2013
Hydro
Itezhi-Tezhi
120
2015
Hydro
Ndola Energy
Company
100
2013
HFO
300
2015
Coal
Maamba
Total
1,869
4,696
Source: ZESCO, Maamba, CEC websites & other Deloitte research sources
20
Based on current planned projects, Zambias power generation

capacity is to increase by two and ahalf times over thenext five
years, from thecurrent c.1,800MW
Overview
Projected power capacity
Zambia has abundant hydroelectric

resources and has historically met
most of its electricity needs from its
own hydroelectric stations, which are
operated by thestate-owned ZESCO
Liimited (ZESCO).
Zambias current installed hydro-power

capacity is less than 2000MW,
while resource potential stands at
anestimated 6000MW.
Hydro power accounts for 99% of

electricity production with themajor
sources being Kafue Gorge, Kariba
North Bank and Victoria Falls power
stations.
Zambias mining sector is thesingle
largest power consumer of power
taking up over 50% of Zambias total
power output.
Zambia was alarge regional electricity
exporter, but in November 2005
ZESCO was forced to suspend exports,
as generation capacity fell owing to
thestart of rehabilitation work on
thecountrys ageing main hydroelectric power stations.
Thefall in generation was so steep
that electricity had to be imported
from South Africa and theDRC.
Matters were worsened in 2007 when
South Africa suspended its own power
exports as theregion fell victim to
widespread power shortages.
21
Based on projects currently in

thepipeline, Zambias power
generation capacity could increase to
c. 4,700 MW over thenext five years.
This excludes theBatoka Gorge project
in respect of which theZambezi River
Authority (ZRA) has recently invited
Expressions of Interest to perform
afeasibility study and environmental
and social impact assessments.
Should Batoka go ahead, it will be
a1,600-MW hydroelectric project
and is expected to take seven to
eight years from date of construction.
Output will be shared equally between
Zambia and Zimbabwe.
ZESCO has recently announced that it
intends to raise up to ZMK10 trillion
(US$2 billion) through amixture of
different type financing instruments
to support various hydro power
generation projects in thecountry.
Theelectricity supply industry primarily comprises thevertically

integrated state utility, ZESCO, and anenergy service company CEC
that purchases power from ZESCO and supplies it to themines
Key players in Zambias electricity
sector
Thekey players in Zambias electricity
industry include:
- ZESCO: Avertically integrated
generation, transmission, distribution state utility which currently
accounts for 99% of thecountrys
electricity generation capacity.
Thecompany produces thebulk of
its power from three main hydro
power plants, namely Kariba North
bank, Kafue Gorge and Victoria Falls
power stations. In addition, ZESCO
generates limited amounts of power
from mini hydro power stations
including Chishimba, Lusiwasi and
Shiwangandu.
- CEC: ALuSE listed company that
was created following theprivatisation of ZCCM power division in
1997. Currently, CECs principal
assets comprises transmission
and distribution assets in
theCopper belt region of Zambia.
It is estimated that thecompany
purchases 55% of thepower
generated by ZESCO, which it
supplies to themines. As part
of its growth strategy, CEC has
recently announced that it would
be partnering with aNigerian
investment bank to develop
theKabompo gorge hydro-power

project in northwestern Zambia
(34MW) and five Luapula river
hydro power projects with
anestimated combined capacity of
800MW.
- LHPC: Aprivately owned
independent power producer
created following theprivatisation
of ZCCM. TheCompany has
aninstalled capacity of 55MW
and currently sells all its power to
ZESCO under apower purchase
agreement. LHPCs vision is to grow
generation capacity to more than
300MW by 2018.
- ERB: Theregulating body of
Zambias energy sector, including
power.
22
Zambias other key energy sources comprise

petroleum and coal
Other key energy sources
Apart from electricity, Zambias other
key energy sources comprise:
Petroleum: Zambia imports all of
its petroleum needs primarily via
a1,700km pipeline which runs
from Dar es Salaam to Ndola, in
thecountrys Copperbelt Province.
Thecountry has one petroleum
refinery plant with adesign capacity of
800,000 tonnes per annum
Coal: proven coal deposits are
estimated at over 30 million tonnes.
Maamba Collieries Limited is
thelargest coal mining company
in Zambia and it is in theprocess
of investing in acoal based
300MW power generation plant at
anestimated capital outlay of approximately US$750 Million.
23
There have been anumber of new entrants into Zambias

banking sector over thepast few years, following improvements
in thefinancial services regulatory framework macro-economic
management
TheEconomic Environment - Financial Services
Overview
Pre-2006, thebanking system was
small and under-developed. However,
over thepast few years anumber of
new banks have entered themarket
including:
- Access Bank of Nigeria;
- Ecobank from West Africa
- First National Bank of South Africa
- United Bank of Africa of Nigeria;
and
Currently, there are 33 micro-financial

institutions in Zambia excluding
leasing, building societies and bureau
de change, which all fall under
thenon-bank financial institutions
category. Non-bank financial
institutions refers to institutions or
persons authorised by law or theBank
of Zambia to engage in banking
business not involving thereceipt of
money on current account subject to
withdrawal by cheque.
- Rabo Bank of Netherlands who have

acquired 49% of Zambia National
Commercial Bank.
Improvements in thefinancial services
regulatory framework coupled
with improved macro-economic
stability have had apositive impact
on Zambias financial system over
therecent past.
Among thegroup of seven foreign
banks, three large banks (Barclays,
Standard Chartered and Stanbic Bank),
play adominant role in Zambias
financial system.
24
Barclays, Finance Bank and ZANACO, have thewidest branch

network in Zambia
Branch network for commercial banks
Registered Bank
Number
of branches
AB Bank
Access Bank Zambia
African Banking Corporation
Bank of China
Barclays Bank Zambia
55
Cavmont Capital
16
Citibank Zambia
Ecobank Zambia
Finance Bank Zambia
51
First National Bank Zambia
First Alliance Bank
Indo-Zambia Bank
18
International Commercial Bank
Intermarket Banking Corporation
Investrust Bank
19
Stanbic Bank Zambia
19
Standard Chartered Bank
20
United Bank for Africa Zambia

Zambia National Commercial Bank
Source: Bank of Zambia
25
4
59
2 000
2 500
1 500
2 000
1 000
1 500
500
1 000
-500
Maize
Wheat
Sweet
potatoes
Groundnuts
Soya beans
Thetotal Maize
number of banks
has increased
fromGroundnuts
10 in 1990 Soya beans
Wheat
Sweet
potatoes
to 18 in 2012
2009 / 2010
2010 / 2011
Number of Banks: 1990 - 2012 2009 / 2010
20
18
2010 / 2011
18
18
16
15
10
20
18
16
14
18
15
14
14
10
18
13
16
12
14
12
16
13
10
10
5
5
1990
1992
0 Bank of Zambia
Source:
1990
1992
1994
1996
1994
1998
1996
2000
1998
2000
2002
2004
2002
2004
2010
2010
2012
2012
Loans
and advances historical development
14,000
12,000

14,000
10,000

12,000
8,000

10,000
6,000

8,000
4,000

6,000
2,000

4,000

2,000
2008
2009
2010
2012
ZMK 'b
2008
2009
2010
2012
ZMK 'b
Source: Bank of Zambia 2011 annual report
26
140
1.2%
120
1.0%
100
0.8%
80
0.6%
60
0.4%
40
Theresponsibility
to regulate Zambias0.2%
financial system lies with
20
theBOZ,- as provided under theBank of
Zambia Act, of 1996
0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011
Regulation
New capital adequacy framework
Zambias financial system is regulated

by theBOZ, whose stated mission is
to achieve and maintain price and
financial systems stability for balanced
macroeconomic development.
TheBOZ issued anew capital

adequacy framework in January 2012.
Prior to January 2012, theminimum
capital requirement for commercial
banks operating in Zambia was
ZMK12 billion (US$2.4 million).
Thenew capitalisation requirement are
linked to theshareholding structure
as follows:
TheBOZ draws its

8%authority from
theBank of Zambia Act, of 1996.
21%
10%
As thecountrys Central Bank,

theBOZs primary functions include:
- Licensing, supervision and regulation
of theactivities of banks and
financial institutions;
- For foreign-owned banks

theminimum requirement is now
ZMK520 billion (US$104 million); and
- Issuance of notes and coins and

regulation of all currency related
matters;
- For local banks , alower threshold

of ZMK104 billion (US$20 million)
- Supporting theefficient operation of

theexchange system; and
Aforeign owned bank refers to abank

with more than 49% of its equity by
foreign entities.
61%
- Acting as adviser to theGovernment

on matters relating to economic
and monetary management.
2011 Loans and advances by sector
20%
29%
Personal Loans
Agriculture
5%
Manufacturing
Wholesale & Retail Trade
5%
Transport, Storage & Comms

10%
18%
12%
Source: BOZ 2011 annual report

27
Financial Services
9.00
Others
8.50
8.00
7.50
7.00
6.50
6.00
Effective 1 January 2013, Zambia rebased its currency, aninitiative

expected to bring several benefits to individuals, organisations and
thecountry as awhole
Currency rebasing
On 23 January 2012, GRZ gave
approval to BOZs recommendation to
rebase theZambian Kwacha, effective
1 January 2013.
Therebasing involved dividing
Zambias currency, theKwacha, by
one thousand (1,000). To illustrate,
ZMK50,000 became ZMW50
following therebasing exercise.
Thekey drivers for implementing
therebasement are as follows:
- To facilitate easier business
transactions: Use of smaller units
simplifies accounting and reduces
therisk of errors arising from data
input and time spent reviewing such
financial data.
- To increase confidence levels in
theZambian currency: People tend
to have less confidence in currencies
with numerous zeros.
- To reduce thecosts associated with
adapting standard accounting
packages: Most accounting
packages are developed in countries
where currencies have significantly
fewer zeros compared to Zambia.
Accordingly, Zambian entities
purchasing these accounting
packages, are required to customize
them by increasing thefield size to
accommodate multiple zeros, at acost.
- To encourage anefficient payment

system: Theadoption of arebased
currency will enable easier use of
vending machines, car park meters
and other related technologies.
In addition it will avoid theneed
to carry large sums of money for
transactions.
- To facilitate theintroduction of
coins: Therebasing of thecurrency
will enable theBOZ to re-introduce
theuse of coins, which are significantly more durable compared to
notes.
Thecurrency rebasing transition
period will run from 1 January to
30 June 2013. During this period
both thenew and old currencies
will circulate simultaneously. Further,
both currencies will be used for
thepurchase of goods and services.
During theperiod 1 January 2013
to 30 June 2013, aninterim symbol
(KR) will be used to denote prices
in thenew currency while thecurrent
symbol (K) will denote prices in
theold currency. Post-30 June 2013,
theinterim symbol (KR) will cease to
be used.
Thesimultaneous circulation of
currencies will cease on 1 July 2013
and effective this date theold currency
will no longer be accepted for
thepurchase of goods and services.
28
29%
5%
5%
5%
5%
10%
18%
10%
18%
12%
Zambias insurance industry comprises several private players in

12%
addition to thestate-owned ZISC
Theinsurance industry
ThePensions and Insurance Authority
(PIA) is theregulatory and
supervisory authority for thepensions
and insurance industry in Zambia.
ThePIA was created by thePension
Scheme Regulation Act no. 28 of 1996
and theInsurance Act No. 27 of 1997.
ThePIAs stated mission is to
regulate theconduct of thepensions
and insurance industry through
prudential supervision in order to
protect theinterest of pension scheme
members and insurance policyholders
Soya beans
and to foster theindustrys growth,
development
and stability.
Soya
beans
ts
Zambias insurance industry is relatively

small and comprises thestate owned
Zambia State Insurance Corporation
(ZISC) and several private sector
players including Madison, African Life
and PICZ.18
16
9%
22%
4%
4%
22%
9%
ZISC
Madison
25%
36%
25%
36%
16
PICZ
NICO
Goldman
ZIGI
Life insurance top players by gross premiums

1%
9%
9%
1%
16%
18
13
General insurance top players by gross premiums

4%
4%
29%
29%
16%
13
ZISC
Madison
PICZ
Aflife
ZIGI
2004
2004
2010
2010
46%
2012
Source: BOZ 2011 annual report

46%
2012
29
1 000 000
52%
52%
There is significant growth potential in Zambias tourism industry.

TheZambian Government aims to create some 300,000 jobs in
tourism over thefive-year period to 2017
TheEconomic Environment - Tourism
Tourism is becoming anincreasingly
important foreign exchange earner,
although it currently contributes only
around 5% of Zambias GDP.
Growth in thesector is seen by
theGovernment as having great
potential for diversifying theZambian
economy.
Theprincipal challenges that have
limited Zambias tourism potential
have included therelatively underdeveloped infrastructure, as well as,
inadequate supply of competitive
accommodation.
TheGovernment is attempting to
remedy this and theprospects are
improving. As part of therecently
announced 2013 Budget,
theGovernment has unveiled plans
to create 300,000 jobs in tourism
over thenext five years. In addition,
Zambias tourism sector has benefited
from thepolitical challenges in
neighbouring Zimbabwe.
Most tourists are keen to see

theVictoria Falls, which is located
on theborder between Zambia and
Zimbabwe. New hotels in Zambia are
cashing in on theinflux, and this is
raising revenue collection and creating
new jobs.
In addition to theVictoria Falls,
Zambia is home to 19 national game
parks and 34 game management
areas covering 22.4m hectares.
Tourism will receive aboost in
2013 from theUN World Tourism
Organisation Conference, with
visitor numbers expected to increase
significantly.
30
6.50
6.00
5.50
4%
4%
5.00
2007
22%
9%
Zambia is aiming to grow the number of tourist arrivals to 4 million

by 2015, which compares with just under 1 million in 2011
25%
36%
Zambia tourism sector snap shot
Key highlights
Travel and Tourism as a% of GDP 1%
5.5%
9%
Government 2013 tourism expenditure allocation
ZMK21.1 billion
29%
Revenue from international tourists (2010)
US$125 million
16%
Targeted revenue from international tourists (2015)
33%
US$550 million
Visitor arrivals (2011)
910,000
52%
Visitor arrivals (2015)
4000,000
Targeted new jobs in tourism over next four years to 2017
300,000
Targeted Travel and Tourism as a% of GDP (2015)
8.0%
15%
46%
Zambias visitor arrivals

1 000 000
800 000
600 000
400 000
200 000
0
2004
2005
2006
2007
2008
2009
Sources: EIU, Zambia Country Report (2008); World Travel and Tourism Council,
Travel & Tourism Economic Impact (2009), Tourism ministry website
31
2010
2011
Zambias transport sector is expected to receive amajor boost over

thenext five years driven by major planned investment in road and
rail infrastructure
TheEconomic Environment - Transport
Overview
Zambia is alandlocked country
with several natural lakes and rivers.
Imports, exports and local commerce
are significantly dependent on
road and air transport to facilitate
trade. Zambias lakes, rivers and
canals present significant potential
for development of transport
infrastructure that can enhance and
facilitate trade with neighbouring
countries.
In 2012, theGRZ issued aUS$750
million bond from theinternational
capital market. 57% of theproceeds
of thebond has been allocated to
investment in thetransport sector.
Furthermore, customs duties have
been eliminated for importation of
locomotives, carriages, rail traffic
control equipment, canoes, cruise
and ferry boats, dredgers, pontoons,
motor cycles and new motor vehicles
for certain tourism enterprises.
Approximately 14% of the2013

national expenditure budget
is earmarked for investment in
thetransport sector, amounting to
ZMW 3.4 million.
Afive-year plan to enhance
theexisting road network by 8,000
kilometers is in theoffing. TheGRZ
announcement to increase investment
in rail will decongest existing roads
and reduce road maintenance costs.
As shown below, diesel and petrol
prices have fluctuated significantly
in recent years, accentuated by
uncertainty in global commodity
markets.
32
Zambias transport sector comprises several players including

RDA and RSTA
Key players
Average retail pump price pr litre (ZMW)
Thekey players in Zambias transport

industry include:
9.00
- Road Development Agency

(RDA): Responsible for thecare,
maintenance and construction of
public roads in Zambia.
- National Council for Construction
(NCC): Administration and
registration of road contractors.
- Ministry of Communications and
Transport: Formulation and administration of transport sector policies.
- Road Traffic and Safety Agency
(RTSA): Implementation of
policy on road transport, traffic
management and road safety.
8.50
8.00
7.50
7.00
Unleaded petrol
6.50
6.00
Diesel
5.50
5.00
2007
2008
5%
29%
33%
52%
2010
Source: Energy Regulation Board website
- Zambia Railways and Tanzania

Zambia Railway (TAZARA): Railway
operators.
33
2009
2011
2012
7.00
6.50
6.00
5.50
4%
4%
5.00
2007
22%
2008
2009
Zambias ICT sector is regulated by ZICTA

25%
TheEconomic Environment - Telecomms

Regulation
TheZambia Information and
Communications Technology Authority
(ZICTA) is anICT Regulatory
body responsible for regulating
1%
9% theInformation and Communications
Technologies (ICT) Sector in Zambia.
Market share of mobile market based on subscription
29%
ZICTAs stated visions is:
To be
thecatalyst of abetter Zambia
transformed through theuse of ICTs in
all sectors of theeconomy.
ZICTA derives its mandate from

thethree Acts, thePostal Services
Act No. 22 of 2009, Electronic
Communications and Transactions
Act No. 21 and theInformation and
Communications Technologies (ICT)
Act
46%No. 15 of 2009 to regulate ICTs,
postal and courier services in Zambia.
2005
2006
2007
2008
33%
52%
MTN
ZAMTEL
15%
Airtel
Sources: ZICTA website 3 February 2013
2009
2010
2011
34
2010
Increasing competition in theZambian telecommunications sectors

has led to lower price tariffs, and increased investments
Mobile phone sector
Themobile phone sector has
boomed in recent years, with
competition between thethree
providers, thestate-owned ZAMTEL
and theprivately owned MTN and
Airtel Zambia resulting in major
improvements in coverage and quality
together with significantly lower
prices.
Thecountrys telecommunications
market is dominated by mobile
network operator Bharti Airtel which
has amarket share around 52%, with

MTN and ZAMTEL in second and third
place respectively.
All operators have intensified efforts
to cover rural areas, and nearly all
ten provinces can now be reached
by mobile phones on one of
thenetworks.
TheGovernment of Zambia has recently
confirmed it intends to license afourth
mobile network operator in thenear
future and aims for thenew player to be
in place before theend of 2013.
Mobile voice market: subscription & penetration levels
70%
9,000
8,000
Subcribers (000)
7,000
Penetration levels
60%
50%
6,000
5,000
40%
4,000
30%
3,000
20%
2,000
10%
1,000
-
2003
2004
2005
2006

35
2007
2008
2009
2010
2011
0%
011
0.8%
80
0.6%
60
0.4%
40
0.2%
20
-
2003 2004 2005 2006 2007 2008 2009 2010 2011
Zambias fixed line sector is controlled by state owned ZAMTEL

70%
60%
50%
40%
Fixed telephony
Market share of internet subscription
8%
Thefixed line telephone sector

is amonopoly controlled by
thestate-owned ZAMTEL.
21%
10%
As depicted opposite, thenumber

of fixed lines in thecountry is low,
30%
with thenumber of lines at less than
100,000.
20%
10%
0%
Penetration levels are less than 1%.

Internet sector
Africonnect
Zambia has recently gained access to

international submarine fiber optic
cables for thefirst time, which has
already led to some significant retail
price reduction for broadband services.
ZAMTEL
Third generation (3G) mobile

broadband services were launched in
early 2011 and national fiber networks
are being rolled out by anumber of
different companies. Several ISPs have
rolled out W/MAX wireless broadband
networks.
These developments are set to
increase broadband penetration
significantly in thecoming years.
ZAMNET
Other
61%
Mobile voice market: subscription & penetration levels
140
1.2%
120
1.0%
100
0.8%
80
20%
29%
60
0.4%
40
0.2%
5%
20
5%
0.6%
2003 2004 2005 2006 2007 2008 2009 2010 2011
0.0%
10%
18%
12%
36
0.0%
TheLusaka Stock Exchange was opened in 1994 and currently

has 21 listed companies
TheStock Exchange
TheLusaka Stock Exchange (LuSE)
was established in 1994 as amodern
stock exchange based on themost
current international standards and
practices. These include:
- Use of acentral share depository
system.
- Trade-for-trade netting clearing and
settlement process.
- Rolling settlement three days after
thetrade (T+3).
Theprimary objectives of LuSE include:
- To enable local businesses raise
longer term capital.
- Citizenship empowerment through
shares ownership.
- To attract foreign direct investment
(FDI).
- To enable companies achieve
wider share ownership and good
corporate governance.
37
There are currently 21 listed

companies on LuSE. Ten of these were
triggered by Zambias privatisation
process in the1990s / early 2000s.
Notably Shoprite, which should benefit
from rising consumer demand in
thecountry, represents over half of
LuSE market capitalisation making it
by far thelargest company on this
basis, driven by thedual listing of its
holding company on theLuSE and
theJohannesburg Stock Exchange.
Overall supervision of theZambian
capital market including licensing
and registration falls under theambit
of theSecurities and Exchange
Commission (SEC), which was
established in 1993.
Thetotal market capitalization of LuSE is aproximately

US$9.5 billion
Lusaka Stock Exchange (LuSE) Key stats
Crop
Date opened
21 February 1994
Main stock index
LuSE All Share Index
Total number of listed entities
21
Total market capitalisation
ZMK49,364 billion (US$9.5billion)
Most liquid sectors
Banking
Top 5 listed companies by

market capitalisation
Shoprite Holdings Limited (US$5,900 million)
Celtel Zambia Plc (US$722 million)

Lafarge Cement Zambia Plc (US$316 million)
Zambia Breweries Plc (US$285 million)
ZCCM IH Plc (US$220million)
Source: LuSE website monthly flash reports
38
4. General business regulations

Company registration is governed by theCompanies Act, 1994
Company registration
Private Limited Companies
Theregistration of companies is
governed by theCompanies Act,
1994 and is done at thePatents
and Companies Registration Office
(PACRA). Registering acompany
typically takes between three to five
working days.
Thefollowing are thetypes of Private

Limited Companies that can be
incorporated:
Theprocess starts with completing

aName Clearance Form requesting
for aparticular proposed name to be
cleared.
There is no law that requires foreign
companies to partner with locals, as is
thecase in other jurisdictions.
There are broadly two types of
companies that can be incorporated in
Zambia, namely:
- Private Limited Companies; and
- Public Limited Companies (PLCs).
39
1. Company Limited by Shares: This

is acompany incorporated for
purposes of carrying on business
driven by aprofit. Currently,
theminimum required authorised
capital for aprivate company
other than banks, insurance and
other financial institution, is ZMK5
million. APrivate Limited Company
may not have more than fifty (50)
shareholders. It nevertheless may
have thecapacity to enter into any
type of legal activities as long as its
articles donot restrict it. This type
of company is however prohibited
from making any invitation to
thepublic to purchase its shares
or debentures. In theevent that
it winds up and its assets are
insufficient to cover its liabilities,
theliability of its shareholders is
limited to theamount left unpaid
on their shares.
Theseare three types of Private Limited Companies that can be

incorporated; namely: Company Limited by Shares, Company
Limited by Guarantee and anUnlimited Company
2. Company Limited by Guarantee:
ACompany Limited by Guarantee
does not have share capital and is
not permitted to carry on business
for thepurpose of making aprofit
for its members or for anyone
concerned in its promotion
or management. This type of
company is normally formed in
order to help thecommunity
benefit from acertain project.
Typically, these are organisations
such as churches, foundations
and trusts. At thetime of
formation, each member must
sign adeclaration of guarantee,
specifying theamount that
themember undertakes to
contribute if thecompany is
wound up. And in case it winds
up, and theassets are insufficient
to cover its liabilities, theliability
of its members is limited to
theamount so guaranteed.
3. Unlimited Company: AnUnlimited

Company is one that has share
capital but whose members
have unlimited liability for
thecompanys debts and other
liabilities. In other words, whatever
is incurred by thecompany, is also
deemed to have been incurred
by themembers. AnUnlimited
Company may not have more than
fifty (50) shareholders.
40
Registration of acompany involves thesubmission of anapplication

for incorporation, together with anumber of supporting documents
Public Limited Company
APublic Limited Company is required
to have anauthorised minimum share
capital capital of ZMK50 million. It
has thecapacity of entering into any
business activity unless restricted by its
articles of association. Its name always
ends with thewords Public Limited
Company frequently abbreviated
to PLC. Thearticles of association
are required to specifically state that
thecompany is a Public Limited
Company.
APLC can invite thepublic to buy its
shares and accordingly it can list its
shares on theStock Exchange. If it
winds up and its assets are not sufficient
to cover its liabilities, theliability of
theshareholders is limited to theamount
left unpaid on their shares.
Company registration documentation
requirements
To register acompany, thefollowing
documents are required to be submitted
together with theapplication for
incorporation:
- Proposed Articles of Association of
thecompany These are regulations
that govern therelationship between
thecompany and its members;
41
- Asigned consent from each person

named in theapplication as adirector
or secretary of thecompany;
- Adeclaration of guarantee by each
subscriber if theCompany is to be
limited by guarantee; and
- Astatutory declaration that
therequirements of theCompanies
Act have been complied with.
Eligibility to incorporate acompany
in Zambia
Any two (2) or more persons associated
for any legal purpose may form
anincorporated company by subscribing
their names to anapplication for
incorporation and lodging it with
theRegistrar.
Thefollowing are not eligible to
subscribe to anapplication for
incorporation:
- Persons under eighteen years of age;
- Anundischarged bankrupt person;
and
- Anyone who is of unsound mind and
has been declared so by thecourt or
acourt of competent jurisdiction of
another country.
TheZDA is responsible for fostering economic growth and

development in Zambia through promoting trade and investment
TheZDA & investment
licenses
TheZambia Development Agency
(ZDA) is responsible for fostering
economic growth and development in
Zambia through promoting trade and
investment and has thechallenge to
develop aninternationally competitive
Zambian economy through innovations
that promotes high skills, productive
investment and increased trade.
To be eligible for aninvestment license
application, investors must invest not less
than US$500,000 in Zambia. Investment
licenses attract various tax benefits as
discussed in theTaxation section under
Investment incentives.
Applications for aninvestment licence

in some sectors of theeconomy require
proof that application for subsidiary
permits from relevant institutions or
ministries have been lodged.
Exchange Controls
Exchange control regulations were
abolished in Zambia, effective 29 January
1994. As aresult, no restrictions are
imposed on theimport or export of
capital. Repatriation payments can be
made in any currency. Both residents and
non-residents can hold bank accounts in
any currency.
All applications for investment licences

must be submitted to theZDA and must
submit thefollowing documents:
- Copy of Certificate of Incorporation,
issued by theRegistrar of Companies;
- Certificate of Share capital;
- Official list of shareholders / directors;
- Proof of finance (certificate of deposit
at bank or latest bank statement); and
- Detailed business plan.
- Proof of having secured aplace / land
to operate from (Lease Agreements or
Title Deed or Letter of Offer)
42
Any non- Zambian individual who resides, enters and re-enters Zambia
for purposes of employment must obtain anemployment permit
Employment permit
- Certified photocopies of professional

certificates;
Public Limited Company
- Copy of letter of offer of employment/

contract; and
Anemployment permit allows

anindividual to reside, enter and
re-enter Zambia while in employment
during thevalidity of thepermit.
Employment permits are issued by
theDepartment of Immigration to
foreigners working in Zambia. Zambian
law requires that applicants secure their
employment permits while outside
thecountry. However, Government
employees, volunteers, missionaries and
investors may apply for their permits
whilst in thecountry.
Work permits are issued within about
amonth, but it may take significantly longer depending on specific
circumstances.
Application steps
In order to obtain aZambian
employment permit, thefollowing
information is required to be submitted
to theDepartment of Immigration:
- Aduly completed employment permit
application form;
- Two recent passport size photographs;
- Police clearance certificate from
applicants country of permanent
residence proving that applicant has
no previous criminal record;
43
- Certified photocopies of thepassport.
Temporary employment permit

Overview
This permit is issued to any business
visitor intending to remain in Zambia
for aperiod exceeding thirty (30) days.
Theperiod granted shall not exceed six
(6)months in any period of twelve (12)
months.
Application steps
Applying for temporary employment
permit involves submission of
thefollowing information:
- Aduly completed employment permit
application form;
- Two recent passport size photographs;
- Certified photocopies of current
passport; and
- Covering letter to theDirector General
of Immigration from theemployer
indicating thenature of work
theapplicant intends to undertake in
Zambia.
Operating in certain sectors requires specific permits to be obtained

from relevant regulatory bodies
Sector specific permits
Energy sector: TheEnergy Regulation
Board is theprimary regulatory board
in theenergy sector and has overall
responsibility for issuing energy licenses.
Energy license applications are required
to be supported by:
- Afive - year business plan;
- Latest audited financial statements;
- Details of subsequent significant
capital outflows including major
decommissioning costs; and
- Estimates of net annual cash flows.
Financial sector: TheBank of Zambia,
as Zambias Central Bank and agency
for executing Governments monetary
policy, is responsible for issuance of
banking licences. Key information
requirements from applicants of
- Disclosure of any criminal record for all

principal managers and directors;
- Business plan with three-year financial
projections (profit & loss account,
cash flow and balance sheet);
- Curriculum vitae for all principal
managers and shareholders;
- Copy of thecompanys Certificate of
Incorporation;
- Copy of thecompanys Articles of
Association; and
- Approval by thehome country
supervisors (usually another Central
Bank), if theapplicants are foreign
registered financial institutions
abanking licence include:

- Minimum capital requirement of
ZMK520 billion (US$104m) for foreign
owned banks or ZMK104 billion
(US$20 million) for alocal bank;
- Complete questionnaire for principal
managers and directors;
44

from relevant regulatory bodies
Mining sector: TheMinistry of Mines
and Mineral Resources is responsible
for theissuance of permits and licences
relating to investment in themining
sector. Thelicences and permits issued
include:
- Large-scale mining licence;
- Small-scale mining licence;
- Prospecting permit; and
- Gemstone licence and sales certificate.
Applications for themining sector
permits and licences must be supported
by thefollowing documents, as
appropriate:
- Topographical maps of thearea;
- Certificate of incorporation and Articles
of Association;
- Photocopies of passports of directors
and shareholders;
- Bank statements and reference letters
from applicants bank;
- Programme of operations and
estimated costs; and
- Statement of mineral deposit in
themining area.
Telecommunications sector:
Telecommunication service licenses
are provided in three distinct
categories, under ZICTAs mandate:
- Type A: Licenses that require service
providers to install, own and operate
public switched telephone network
(PSTN) infrastructure e.g. network
facilities for basic local or national long
distance services.
- Type B: Licenses that donot require
ownership of public networked
telephone facilities in order to provide
services e.g. Internet Service Providers
(ISPs*).
- Type C: Licenses that require ownership
of infrastructure facilities for cellular
mobile services.
Theapplication procedure, involves:
- Submission of aduly completed
application form to ZICTA;
- Evaluation of theapplication form by
ZICTA;
- If approved, ZICTA subjects
theapplication to comments from
thepublic and other interested parties
where necessary;
- For successful applications, alicense
is issued following payment of
theappropriate license fee; and
- Unsuccessful applicants may appeal
against thedecision of theAuthority to
theMinister of Communications and
Transport.
45

from relevant regulatory bodies.
Tourism sector: Investment projects
that have to be located in aGame
Management Area will require apermit
issued by theZambia Wildlife Authority
(ZAWA). Applications for thepermit
should be supported by thefollowing
documents:
- Project proposal;
- List of Shareholders;
- Information on promoters business
experience;
- Recommendation letter from
theDistrict council;
- Letter of Consent from thechief
(Game Management Areas fall
under traditional land which is under
thejurisdiction of thelocal chief);
- Project proposal; and
- Building drawings.
Minimum wages and

conditions of employment
TheMinimum Wages and Conditions
of Employment Act Cap 276 enables
theGovernment to determine minimum
conditions of employment for various
categories of employees including
general workers, drivers and clerks.
Social security
Zambias public pension scheme
is administered by theNational
Pension Scheme Authority (NAPSA).
Membership to NAPSA is compulsory
for all regularly employed persons.
Thescheme is financed by both
theemployer and employee contributions at therate of 5% each, subject
to aceiling determined annually.
46
Mergers and acquisitions that meet certain criteria require

pre-approval by theCompetition and Consumer Protection
Commission
Mergers and acquisitions
Mergers and acquisitions in Zambia are
governed, from anapproval perspective,
by theCompetition and Consumer
Protection Act, 2010 (theAct), which
is administered by theCompetition
and Consumer Protection Commission
(theCommission).
Section 24 of theAct defines amerger
transaction as where anenterprise
directly or indirectly, acquires or
establishes, direct or indirect, control
over thewhole or part of thebusiness
of another enterprise, or when two
or more enterprises mutually agree
to adopt arrangements for common
ownership or control over thewhole or
part of their respective businesses.
Section 24 of theAct further states
that amerger could occur where
anenterprise purchases shares or
leases assets in, or acquires aninterest
in, any shares or assets belonging to
another enterprise or where ajoint
venture occurs between two or more
independent enterprises.
47
Section 26 of theAct states that

parties to amerger transaction that
meets thethreshold for authorization of aproposed merger shall
apply to theCompetition and
Consumer Protection Commission
(theCommission) for authorization of
theproposed merger.
Thequantum of theThreshold is
stipulated in Part VSection 8 (1) of
Statutory Instrument No. 97 of 2011,
which states: Amerger transaction
shall require authorisation by
theCommission where thecombined
turnover and assets, whichever is
higher, in Zambia of themerging
parties, is at least fifty million fee units
in their latest financial year, for which
figures are available. Currently one fee
unit is equivalent to ZMK180.
Section 28 gives reference to negative
clearance and mandates that parties to
atransaction seeking clarification as to
whether theproposed merger requires
theauthorisation of theCommission
under this law may apply to
theCommission for negative clearance.
Zambias accounting profession is regulated by theAccountants Act

of 2008 through theZambia Institute of Chartered Accountants
Accounting and auditing
Theaccounting profession in Zambia
is regulated by theAccountants Act
of 2008 through theZambia Institute
of Chartered Accountants (ZICA or
theInstitute).
ZICA provides standards for public
practice and accountancy education
in Zambia. All individuals who wish
to practice as public accountants or
auditors are required to apply for
apracticing certificate with ZICA.
ZICA is amember of theInternational
Federation of Accountants (IFAC).
IFAC is aglobal organization committed
to protecting thepublic interest by
supporting thedevelopment of all
sectors of theaccountancy profession
around theworld.
All members of ZICA, including those
holding acertificate of public practice
are mandated to undertake activities
to further Continuing Professional
Development (CPD) in order to
remain competent and relevant to
theaccounting profession. CPD
is thecontinuous maintenance,
development and enhancement
of theprofessional and personal
knowledge and skills which members of
ZICA require throughout their careers in
accounting.
TheAccountants Act of 2008 states

that apracticing certificate will be
awarded once anindividual has been
amember of ZICA continuously for
aperiod not less than 12 months; and
before or after, or partly before or partly
after admission to membership of ZICA,
he/she has completed aperiod, being
not less than 30 months of approved
accountancy experience under
supervision of anapproved principal in
theoffice of apublic accountant.
Theexperience should be:
- Of awider and deeper nature than that
required for ZICA Membership;
- Gained in four of thefollowing areas:
accounting, auditing, taxation,
incomplete records, computer systems
and operations, and sources of finance;
- Reviewed by anapproved principal;
and
- Confirmed by asupervising principal.
48
Zambias accounting profession is regulated by theAccountants Act

of 2008 through theZambia Institute of Chartered Accountants
Accounting standards
Thelocal accounting framework is
theInternational Financial Reporting
Standards (IFRS). TheCompanies
Act 1994 (as amended) also provides
for company accounting regulations.
Entities are required to use one of three
tiers for financial reporting purposes as
shown below:
Type of entity
Financial reporting framework
Listed companies, public interest entities

and Government-owned enterprises
Full IFRS
Economically significant companies

companies that are not public companies
or quoted on thestock exchange with
turnover greater than ZMW 20 million
IFRS for SMEs or Full IFRS at

theCompanys discretion
Micro and small entities defined as

entities with turnover less than ZMW 20
million.
Zambian Financial Reporting Standard

for micro and small entities
Auditors and audited financial

statements
All audits in Zambia are required to

be conducted in terms of International
Standards on Auditing (ISA). Only
registered public accountants and
auditors who are chartered accountants
are permitted to carry out statutory
external audits.
49
.Anexternal audit is astatutory

requirement for all companies
with limited liability. All companies
must lodge anannual return
with theRegistrar of companies
accompanied by anaudit report .
Companies whose annual financial
statements are audited are required to
submit audited accounts to theZRA
when filing their income tax returns.
5. Taxation
Zambia operates asource-based system of taxation whereby every
person receiving income from asource within or deemed to be
within Zambia, is liable to income tax in Zambia on that income
Introduction
This information is based on existing
tax legislation and the2013 Budget
Address delivered by theMinister of
Finance, Honourable Alexander Bwalya
Chikwanda, MP, to National Assembly
on 12 October 2012.
Tax administration
Zambia operates asource-based system
of taxation. Every person receiving
income from asource within or
deemed to be within Zambia, will be
liable to income tax in Zambia on that
income. Theconcept of residence is of
secondary importance in that it only
extends thetax net to cover interest
and dividend income received from
aforeign-source by Zambian residents.
Thetax year for both individuals and

companies currently runs from 1
January to 31 December.
Income tax is divided into PAYE, Tax on
Self-employed Individuals and Company
Tax. A3% income tax on all commercial
imports was introduced from 1 April
2007. TheMinister, however, has
theauthority to determine when this
tax will not be applicable.
Thetax system is administered by

theZambian Revenue Authority (ZRA),
anagency established in 1994. Where
disputes arise between taxpayers
and theZRA under theIncome Tax
Act, Value Added Tax (VAT) Act
and theCustoms and Excise Act,
theaggrieved party has aright of
appeal to theRevenue Appeals Tribunal
(RAT), astatutory body that hears and
determines thesettlement of tax cases.
Aparty dissatisfied with thedecision of
theRAT can appeal to theHigh Court
of Zambia.
50
PAYE is collected at source from individuals in gainful employment

Pay As You Earn (PAYE)
Overview
Tax on self-employed Individuals
PAYE is collected at source from

individuals in gainful employment.
Theemployer deducts thetax from
theemployees salary or wages and
is required to remit it to theZRA by
the14th of themonth following
themonth of deduction.
This tax is levied on business profits of

individuals running business ventures
as sole proprietors, or partners in
apartnership, at thegraduated PAYE
rates.
TheGovernment has again maintained

thegraduated four-band system for
taxing income from employment but
thePAYE exempt threshold has been
increased from ZMK24 million per
month to ZMK26.4 million per month.
For individuals earning both business

income and emoluments, business
income that has been taxed under
turnover tax is (as from 1 April 2007)
no longer added to emoluments
that are subject to PAYE but remains
under theturnover tax system. Thetax
treatment for income that exceeds
theannual threshold is not clear.
Non-residents
Therates opposite are also applicable to
non-residents in respect of employment
and business income earned in Zambia.
In addition, certain payments made to
non-residents are subject to WHT.
2013 PAYE regime

PAYE Rates for Individuals: From 1 January 2013
Annual Taxable Income as exceeds
But does not exceed
Rate
ZMK
ZMK
26400000
0%
26400000
36000000
25%
36000000
70800000
30%
70800000+
51
35%
Company tax is levied on business profits of incorporated companies

and branches of foreign companies
Company tax
Overview
Company tax is levied on business
profits of incorporated companies
and branches of foreign companies.
Taxpayers are required to compute
taxable income on anactual basis by
reference to thecharge year.
Acompany that has anaccounting
year-end other than 31 December, can
apply to theZRA to base its tax return
on theaccounting year-end. Thefinal
tax returns are due by 30 June following
theend of therespective charge year.
New listings on theLuSE attract a2%
discount on theabove income tax rate
applicable and afurther 5% discount
where Zambians hold at least 33% of
theshares.
Where companies operate in

thepriority sectors under theZambia
Development Agency Act, they are
allowed thefollowing:
- Exemption from income tax for five
years from thefirst year that taxable
profits are made, 50% in years six to
eight and then 25% in years nine to
ten.
- Dividends will be exempt from tax for
aperiod of five years from date of
commencement of operations.
- Capital expenditure on
theimprovement or upgrading
of infrastructure will qualify for
animprovement allowance of 100% of
such expenditure.
Zambian transfer pricing rules require

that transactions between associated
persons be on arms length terms.
Thetax authorities can replace actual
conditions with arms length
conditions for commercial or financial
transactions between associated
persons.
52
Companies listed on theLuSE attract a2% reduction on

therelevant sector, company tax rate
2013 Income tax rates for companies
Income Tax Rates : January 2013 to December 2013
Rate of Tax
Basic rate
Companies listed on theLuSE (year of listing)
35%
2% less than thesector rate
Banks
35%
Mobile telecommunications operators - First K250 million profit
35%
- Balance of profit
40%
Charitable organisations - Income from commercial activities
15%
Farmers, exporters of non-traditional products,

producers of chemical fertilisers
10%
Manufacturers and others
35%
Rural enterprises
30%
Businesses with turnover up to K200 million,

excluding consultancy (Presumptive Tax)
53
3%
Mining companies are taxed at areduced rate of 30%, which

compares with 35% from other companies
Mining tax regime
Theregime for thetaxation of mining
companies is as follows:
- Abasic rate of 30% (other companies
remain at 35%).
- Variable profit tax of up to 15% on
taxable income that is above 8% of
gross income.
- Amineral royalty rate on base metals at
6% on gross value.
- TheGovernment has proposed to
increase theWHT rate from 15% to
20% on payments of management
or consultancy fees and royalties to
non-resident contractors with effect
from 1 January 2013.
- Areference price is applied for

thepurposes of assessing mineral
royalties and any transaction for
thesale of base metals, gemstones
or precious metals between related
or associated parties. Thereference
price is to be based on theLondon
Metal Exchange or other commodity
exchange prices.
- Cash accounting basis for VAT.
- Transfer pricing law will be enhanced
to specifically apply to related party
borrowings by mining companies in
addition to theexisting thin capitalisation rules (effective from 1 January
2012).
- WHT on dividends at 0%.

- Capital expenditure deductions:
forming equipment, plant, machinery
and other capital expenditure will be
claimed at therate of 25% per annum,
from theyear that theasset is brought
into use (previously given at 100% of
capital expenditure incurred).
54
Whilst there is no CGT in Zambia, when anasset is sold, theexcess

of theproceeds from theasset over thetax written down value is
treated as abalancing charge which is combined with theentitys
taxable income
WHTs
Certain payments to residents and
non-residents, whether individual or
corporate, are subject to WHT.
Capital Gains Tax (CGT)

There is no CGT in Zambia. However,
where anasset is sold in respect of
which capital allowances have been or
could have been claimed, theexcess
of theproceeds from theasset over
thetax written-down value is treated as
abalancing charge which is combined
with theentitys taxable income. In
each instance, thebalancing charge is
restricted to theallowances previously
claimed.
For mining companies, theGovernment
has proposed to introduce PPT at 10%
on thetransfer or sale of amining right
granted under theMines and Minerals
Development Act, 1994 (effective 1
January 2013).
55
2013 WHT
WHT rates
Residents
Non-residents
Commission paid
to non-employees
15%
15%
Dividends, royalties,
rental income,
management
and consulting fees
15%
15%
15%
15%
15%
15%
Entertainers
and sportspersons
Interest
Non-resident contractors
Thestandard rate for VAT is 16%. VAT registration is voluntary for

businesses with anannual taxable turnover below K800 million
VAT
TheVAT registration threshold has been
increased from K200 million to K800
million per annum effective 1 January
2013. Therefore, Companies and
individuals dealing in taxable supplies
and with aturnover exceeding ZMK800
million per annum are required to
register for VAT. Registered suppliers
should submit returns to theZRA for
each calendar month within 21 days of
theend of themonth and account for
theexcess of output over input VAT.
Thestandard rate for VAT is 16%. VAT
registration is voluntary for businesses
with anannual taxable turnover below
ZMKK800 million.
VAT exemptions include infant formula,

health, education, domestic house
rentals, water, transport, financial
and insurance services, conveyancing
services, funeral services, statutory fees
and insurance brokering.
Proposed changes to take effect from 1
January 2013 include:
- TheVAT registration threshold is
increased from ZMK200 million to
K800 million per annum;
- Goods supplied to, or imported by,
businesses operating in anMFEZ or
industrial park have been standard
rated.
VAT registered suppliers with anannual

taxable turnover of ZMK1 billion and
above are required to submit input
tax schedules electronically and in
theapproved manner.
Supplies of goods and services are
taxable at standard rate, zero-rated or
exempt. Input tax paid on purchases
to produce exempt supplies is not
recoverable.
56
Customs duty is levied on goods imported into Zambia at rates

ranging from 0% to 25%
Customs and Excise
Theimportation of goods into Zambia
is subject to import or customs duty. All
goods are categorised as to whether
they are raw materials, intermediate
or finished goods, and taxed at rates
in therange 0% to 25% on cost,
insurance and freight value (or value for
duty purposes).
Excise duties are levied on specific
classes of goods manufactured in,
or imported into, thecountry by
reference to value using pre-determined
rates contained in theHarmonised
Commodity Description and Coding
System plus thecustoms duty payable
on those goods. From 1 January 2011,
a10% excise duty on plastic bags was
introduced.
57
Proposed changes to take effect from

1 January 2013 include:
- Thecustoms duty rate on flat-rolled
products of iron or non-alloy steel
not clad, plated or coated, used in
themanufacture of roofing sheets has
been increased from 0% to 15 percent;
- Customs duty on flat rolled products of
iron or non-alloy steel, clad, plated or
coated excluding those coated with tin
and lead, has been increased from 0%
to 25%t;
- Customs duty on importation of
multiple or cabled yarn (knitting wools)
of synthetic staple fibers has been
increased from 0% to 15 percent; and
- Duty has been removed on wide range
of medical, mechanical and electrical
tools, plant, machinery and equipment.
Transfer of property attracts PTT at arate of 5% of therealised value

of theproperty being transferred
PTT
PTT is charged at 5% on therealised
value of theproperty being transferred.
It is payable by thetransferor.
Property includes any land (including
any buildings, structures, or other
improvements thereon) and any share
issued by acompany in Zambia that is
not listed on theLuSE.
Therealised value is theprice at which
theshares or land could, at thetime
of transfer, reasonably have been
sold on theopen market. There is
adiscretionary exemption for transfers
of property within thesame group of
companies, provided thetransferee
is acompany resident in Zambia and
thetransfer is for thepurposes of
effecting internal group reorganisation.
Effective 1 January 2013,
theGovernment has proposed to
introduce Property PPT at 10% on
thetransfer or sale of amining right
granted under theMines and Minerals
Development Act, 1994.
58
Agricultural activities are taxed at areduced rate of 15%
Investment Incentives
Agriculture
Manufacturing
Income taxed at areduced rate of

15% (10% from 1 April 2012) (except
for cotton lint - theincome tax rate
on profits from export of cotton lint is
35%).
Refund of Zambian VAT on export of

Zambian products by non-resident
businesses under theCommercial
Exporters Scheme.
Dividends paid out of farming exempt

from tax for thefirst five years of
thedistributing company commencing
farming.
VAT deferment on importation of some
agricultural equipment and machinery.
No import duty on irrigation equipment
and reduced duty rates on imports of
other farming equipment.
Reduced customs duty at 5% on
premixes, being vitamin additives for
animal feed.
Company income tax rate applicable
to themanufacture of organic fertiliser
has been reduced from 35 percent to15
percent(effective 1 January 2013).
59
Guaranteed input tax claim for two

years prior to commencement of
production.
Income from chemical manufacturing
of fertilizers is taxed at areduced rate
of 15%.
Import duty on certain textile machinery
has been reduced to 0% and all woven
fabrics of polyester imported for further
processing, all imported sewing threads
and grey fabric has duty reduced to 0%.
Import duty on PVC lining and eyelets
used in themanufacture of shoes has
been reduced to 5%.
Import duty on semi-refined wax and
cerechlor used in themanufacturing
of paint, and on tapioca starch with
dextrose powder which is used in
themanufacture of biscuits, has been
reduced 15%.
Tourism attracts various incentives including zero import VAT on all

goods temporarily imported into thecountry by foreign tourists
Tourism
General incentives
Zero-rate of VAT on tour packages

throughout Zambia.
Import VAT relief for VAT registered

businesses on imports of eligible capital
goods (i.e. VAT Deferment).
Zero-rate of VAT on other tourist

services provided to foreign tourists
other than those included in tour
packages.
Refund of VAT for non-resident tourists
and visitors on selected goods.
No import VAT on all goods temporarily
imported into thecountry by foreign
tourists.
Inadequate infrastructure, service
delivery and limited marketing activities
addressed by thedevelopment of
Kasaba Bay, Livingstone and Mfuwe
tourist areas and future refund of
certain expenses incurred in showing
movies that promote thecountry.
In order to leverage themaximum
benefit from hosting the2013 United
Nations World Tourism Organisation
Conference, Government proposes to
suspend duty up to 31 December 2013
on thefollowing goods:
Zero rate of VAT on export of taxable

products.
Guarantee of VAT refund within 30 days
of lodgment of adequately supported
claims within 30 days of submission of
theclaim.
Relief of VAT on transfer of business as
agoing concern.
Equal treatment of services for VAT
irrespective of domicile of supplier (i.e.
reverse VAT).
Cash accounting for VAT for members
of theAssociation of Building and Civil
Engineering Contractors.
Guaranteed VAT input tax claim for three
months prior to VAT registration for
businesses that have already commenced
trading.
Reintroduction of voluntary registration
for compliant businesses whose turnover
is below ZMK800 per annum subject to
conditions stated above.
- New motor vehicles for tourism

enterprise that offer transport services.
Registered businesses allowed to re-claim

20% of input VAT paid on petrol.
- New articles and equipment needed to

furnish or refurbish accommodation
and catering facilities for businesses
licensed as tourism enterprises.
Exemption of interest component of

finance leases from VAT.
Reduction of VAT rate for investors in
manufacturing, agriculture, commercial
banking and insurance operating in
tax-free zones.
60
Qualifying companies operating under theZambian Development

Agency (ZDA) Act attract various investment incentives
Concessions for companies operating
under theZambian Development
Agency (ZDA) Act
Further concessions for developers and

investors in theMFEZ and industrial parks
(introduced last year) include:
Profits made in designated zones are

100% exempt from income tax for five
years from thedate when theapproved
investment commences operations, 50%
in years six to eight, 25% in years nine to
10 and then 0% thereafter.
- Removal of WHT on management

fees, consultancy fees, and interest
re-payments to foreign contractors.
0% tax on dividends for five years from

thedate when theapproved investment
commences operations.
0% import duty rate on raw materials,
capital goods and machinery (including
trucks and specialised motor vehicles) for
five years.
Deferment of VAT on machinery and
equipment (including trucks and
specialised motor vehicles).
61
- Zero-rating of supplies to developers

of MFEZ and industrial parks.
- Foreign suppliers to MFEZ and
industrial parks exempt from reverse
VAT charge.
- Exemption from customs duty of
equipment and machinery imported
for thedevelopment of MFEZ and
industrial parks.
Dividends paid by aZambian Company are subject to a15% WHT

which, however, does not apply on repatriation of profits made by
abranch to its Head Office. This makes operating aBranch more
attractive from atax perspective
Company vs. Branch
For most practical tax purposes
aregistered branch and aresident
company are treated similarly in that
thesame rates of tax apply to effectively
thesame quantum of profit.
However, there is animportant
difference between acompany and
abranch which arises on therepatriation
of profits. In theabsence of afavourable
double taxation agreement thepayment
of dividends by asubsidiary would be
subject to deduction of withholding tax,
currently at arate of 15%.
This would give aneffective tax rate of

44.75% (being 35% company income
tax and 15% withholding tax) on any
profits repatriated outside theRepublic.
By contrast, abranch can repatriate its
profits with no tax withholding, giving
aneffective Zambian tax rate of 35%.
Additionally, acompany requires
theappointment of at least two
directors, whereas abranch requires only
one. For both acompany and abranch,
more than 50% of thedirectors must be
resident in Zambia.
62
6. About Deloitte
Theglobal firm
Deloitte is aglobal professional services provider, with astrong

presence in Zambia
Kitwe
Lusaka
EMEA
US$ 10.0 billion
62,700 people
Asia Pacific
US$ 3.6 billion
34,000 people
Americas
US$13.0 billion
72,850 people
Zambia
2 Cities
> 100 people
Over 152 countries
Two main offices in Zambia
Aggregate global revenues of US$ 31.3 billion
Professionals working across
Approximately 195,000 people globally
Audit, Tax, Financial Advisory

Services and Consulting
63
Deloitte in Zambia
Deloitte Zambia offers world class professional services via 4 core

service line...
Financial statement audits
Business Tax
Accounting advisory
Indirect Tax
Assurance services
International Tax
Transfer Pricing
Tax
Audit
Clients
Financial
Advisory
Consulting
Corporate Finance Advisory

Human Capital
M&A Transactions Services
Strategy & Operations
Forensic investigations
Technology
Restructuring Services
Ad hoc consulting
Valuation Services
Deloitte Zambias depth of capability is impressive, but what differentiates us is aconsistent ability
to integrate service capability with deep industry sector insights.
64
7. Contacts
Chisanga Chungu
Humphrey Mulenga
Chief Executive Officer
Financial Advisory Services & Consulting
Office: Lusaka
Email: cchungu@deloitte.co.zm
Tel:
+260 211228677
Office: Lusaka
Email: hmulenga@deloitte.co.zm
Tel:
+260 211222036
Alice Jere Tembo
Victor Muhundika
Audit
Tax
Office: Lusaka
Email: atembo@deloitte.co.zm
Tel:
+260 211228677
Office: Lusaka
Email: vmuhundika@deloitte.co.zm
Tel:
+260 211228677
Fellystons Nchimunya
Audit
Office: Kitwe
Email:
fnchimunya@deloitte.co.zm
Tel:
+260 212222688
65
8. Glossary of Terms
BOZ
Bank of Zambia
c.
Circa (approximately)
CEC
Copperbelt Energy Corporation PLC
DRC
Democratic Republic of Congo
EBZ
Export Board of Zambia
EIU
Economist Intelligence Unit
ERB
Energy Regulation Board
FDI
Foreign Direct Investment
GDP
Gross Domestic Product
GRZ
Government of theRepublic of Zambia
HFO
Heavy Fuel Oil
IFAC
International Federation of Accountants
KCM
Konkola Copper Mines Plc
LHPC
Lunsemfwa Hydro Power Company Limited
Maamba
Maamba Collieries Limited
MP
Member of Parliament
NAPSA
National Pension Scheme Authority
PACRA
Patents and Companies Registration Office
PAYE
Pay As You Earn
PIA
Pensions and Insurance Authority
PICZ
Professional Insurance Corporation Zambia Limited
PPT
Property Transfer Tax
SEDB
Small Enterprises Development Board
Telecomms Telecommunications
UN
United Nations
USD
United States Dollar
VAT
Value Added Tax
WT
Withholding Tax
ZAWA
Zambia Wildlife Authority
ZCCM
Zambia Consolidated Copper Mines Limited
ZCCM-IH
ZCCM Investment Holdings Plc
ZEPZA
Zambia Export Processing Zones Authority
ZESCO
ZESCO Limited
ZIC
Zambia Investment Centre
ZICA
Zambia Institute of Chartered Accountants
ZICTA
Zambia Information and Communications Technology Authority
ZMK
Old Kwacha, pre -1 January 2013
ZMW
Thenew re-based Kwacha, effective 1 January 2013
ZPA
Zambia Privatisation Agency
ZRA
Zambia Revenue Authority
ZSIC
Zambia State Insurance Corporation Limited
66
Deloitte provides audit, tax, consulting, and financial advisory service to public and private clients
spanning multiple industries. With aglobally connected network of member firms in more than
150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients
succeed wherever they operate. Deloittes more than approximately 195,000 professionals are
committed to becoming thestandard of excellence.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, aUK private company limited
by guarantee, and its network of member firms, each of which is alegally separate and independent
entity. Please see www.deloitte.com/about for adetailed description of thelegal structure of
Deloitte Touche Tohmatsu Limited and its member firms.
2013 Deloitte & Touche

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Doing Business

3. High-level overview of Zambia

7. Key Deloitte contacts

Doing Business in Zambia Aunique flavour

Zambia has undergone

Looking to thefuture, Isee Zambias

Road infrastructure is projected to

Based on current planned projects,

Doing Business in Zambia Aunique flavour

Deloitte section of this booklet.

Readers are strongly advised to seek

This booklet is aimed at

Located in Southern Africa, Zambia is alandlocked country covering

Zambia - Key statistics

It is estimated that approximately 40%

Doing Business in Zambia Aunique flavour

TheZambian Government is undertaking economic

TheZambian economy has historically

Doing Business in Zambia Aunique flavour

Zambia operates amulti-party democratic system, with

Republic, Universal Suffrage

No. of parliamentary seats

158, with 8 members appointed by thePresident

Date of last Presidential election

Year of next election

Name of current ruling party

Duration of Presidential term

Current Head of State

Mr. Michael Chilufya Sata

Main opposition parties

Movement for Multi Party Democracy

System of governance and arms of

Cabinet Ministers are appointed by

Zambias GDP now stands at US$20 billion, nearly double what

Historical GDP/inflation movement (%)

2004 2005 2006

Real GDP Grow

Source: Bank of Zambia

Recent historical economic trends

Nominal GDP (US$ m)

GDP per capita

Forex rate (ZMK: US$)

External debt stock

2014f 5117 2015f

Source: EIU, Deloitte analysis

Doing Business in Zambia Aunique flavour

Despite unfavourable global economic conditions, theZambian

BOZ, anopportune time to rebase

Application of proceeds from theUS$750m issue

Transport (road and rail)

Human capital and access to finance

Zambias economic outlook appears bright, on theback of increasing

Nominal GDP (US$ m)

GDP per capita

Forex rate (ZMK: US$)

External debt stock

n/a: data not available Source: EIU, Deloitte analysis

- Based on current planned projects,

Doing Business in Zambia Aunique flavour

Inflation is projected to average c.6.4% between 2013 and 2016,

TheKwachas value is expected to be

Forecast GDP / Inflation movement (%)

Inflation which averaged 8.3% in 2011,