What would you say are the peculiarities of the Zambian market and the most common concerns of a foreign company keen to enter the country?
Often companies are concerned about indigenization laws. Currently, Zambia doesn't have any of these with the exception of the Citizens Economic Empowerment Commission requirements, whereby companies that are locally owned, influenced or managed have a greater chance of doing business with the government. There are also investor-friendly labor laws, and no exchange control provisions. Investors are often interested in the availability of tax incentives, with the Zambia Development Agency incentives available (including up to five years free of corporate taxes, and 10 years at a reduced corporate tax rate) for investors in priority sectors and areas. Zambia also has abundant natural resources, not just in copper, but also in other natural resources. Agriculture in particular is a huge potential growth area with significant amounts of unutilized arable land and large freshwater resources. One area of concern for foreign investors is to ensure that there is stability from a governmental and policy perspective. This has been highlighted with the recent introduction of the new mining tax regime, which has been controversial. However, the new President has publicly indicated his willingness to engage with the mining companies on this, which should help to reassure investors.
How would you assess the current level of foreign interest in the country and what needs to be done by both public and private sectors to incentivize and improve the framework for foreign investors?
The level of foreign interest in the country is high. As a professional services firm, KPMG has advised several incoming potential investors, and the number is growing. Zambia is renowned regionally for being politically stable, which appeals to investors wishing to invest in the Southern African region. From the public sector, as mentioned above, policy stability is vital, especially in allowing foreign investors to produce reliable financing models. Meanwhile, certain basic services like internet connectivity and power and water supply should be enhanced. However, having said that, the ease of doing business in Zambia has improved over the years, and the government has been taking steps to improve this, for example, with the creation of the Zambia Development Agency and the One Stop Shops (combining PACRA, ZRA, ZDA offices). Government is also encouraging Public-Private partnerships, for example, with the border posts that have been privately funded, but that will be transferred to public ownership in due course.
What regulatory changes are we likely to see in Zambia in the near future?
A new Companies Bill has been devised to broaden the duties and responsibilities of directors. Additionally, a new Insurance Bill seeks to restrict foreign shareholdings, and will require prior regulatory approval of CEOs, senior personnel and auditors, although it is unclear whether this particular bill will progress. As mentioned above, the mining tax regime may also change depending on the outcome of the government's discussions with business.
What are your expectations for the year ahead?
Another election is due in just over a year, which we expect to be hotly contested but relatively peaceful. In the meantime, we expect greater policy stability from the government, which should hopefully attract more investment into the country. The Zambian economy will continue to grow, and we expect KPMG to grow along with the economy.