QRegional integration is a key priority for Africa, and Zambia is no stranger to it, being an active member of COMESA and SADC for example. What is the importance of regional integration and what are the tangible efforts that have been made so far, such as the Tripartite FTA to boost intra-Africa trade?
Regional Integration is a process in which neighboring states enter into an agreement in order to upgrade cooperation through common institutions and rules. The objectives of the agreement could range from economic to political to environmental, although it has typically taken the form of a political economy initiative where commercial interests are the focus for achieving broader socio-political and security objectives, as defined by national governments.
Past efforts at regional integration have often focused on removing barriers to free trade in the region, increasing the free movement of people, labour, goods, and capital across national borders, and adopting cohesive regional stances on policy issues, such as the environment, climate change and migration.
Regional integration and development remains critical to industrialization. For countries of Southern Africa, regional integration and cooperation are preconditions for accelerated economic and social development. On their own, the Southern African economies, most of them small, agriculture based primary commodity exporters with only incipient industrial development, will not be able to attract the necessary financial and technology transfers to support a sustained industrialisation process.
Efforts that have been made so far on Regional Integration: Pursuit towards SADC regional integration and industrialisation, the Revised Regional Indicative Strategic Development Plan (RISDP) has identified priorities areas to be pursued by the region from 2015-2020 to achieve targets. These include:
(i) Priority Area A: seeks to promote industrial development and market integration through, among other things, strengthening the productive competitiveness and supply side capacity of Member States as well as improving movement of goods and facilitating financial market integration and monetary co-operation
(ii) Priority Area B: seeks to provide and improve infrastructure support for regional integration while; and
(iii) Priority Area D: seeks to promote special programmes of regional dimension under clusters such as education and human resource development; health, HIV and Aids and other communicable diseases; food security and trans-boundary natural resources; environment; statistics; gender equality; and science, technology and innovation and research and development.
Intra-regional trade: which refers to trade, focuses on economic exchange primarily between countries of the same region or economic zone. In recent years countries within economic-trade regimes such as ASEAN in Southeast Asia for example have increased the level of trade and commodity exchange between themselves which reduces the inflation and tariff barriers associated with foreign markets resulting in growing prosperity.
Commonly known as the Tripartite Free Trade Area (TFTA), the integrated market, comprising the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and SADC, was launched in June in Sharm El Sheik, Egypt. The creation of the enlarged market is expected to boost intra-regional trade in Africa and deepen regional integration through improved infrastructure development, investment flows and enhanced competition. The TFTA creates a combined population of some 632 million people, covering half of the member states of the African Union (AU) and a Gross Domestic Product (GDP) of about US$1.3 trillion. Zambia is party to TFTA.
Most importantly, the TFTA is a decisive step towards achievement of the AU vision of establishing an African Economic Community as envisioned in the Lagos Plan of Action, the Final Act of Lagos of 1980, the Abuja Treaty of 1991 as well as the Resolution of the 2006 AU Summit held in Banjul, Gambia.
QDuring President Lungu’s State of the Nation Address in March 2017, he called for a national transformation. Accordingly, the 7th National Development Plan 2017–2021 was approved in June. Zambia’s macroeconomic objectives include accelerating the diversification of the economy, particularly towards tourism, energy, mining, agriculture and agro processing. What is the key role you envision your Ministry to have in this new plan?
The Ministry of Commerce, Trade and Industry is a Government institution charged with the responsibility of formulating and administering policies in the trade and industrial sectors. The Ministry is also responsible for coordinating programmes and activities on trade and industry in order to enhance the sectors’ contribution to sustainable social economic growth and development for the benefit of the people of Zambia.
The Mandate and core functions of MCTI as contained in the Government Gazette Notice Number 836 of 2016 are as follows:
1) Business Names;
2) Business Regulation;
3) Commercial, Trade and Industrial Policy;
5) Competition and Consumer Protection;
6) Cooperatives Development;
8) Industrialisation Policy;
9) Industrial Research;
10) Intellectual Property;
11) Investment Policy;
12) Micro, Small and Medium Enterprises;
13) Standardisation, Standards Quality Assurance; and
14) Weights and Measures.
The Ministry is also responsible for the following Statutory Bodies and Institutions:
i. Zambia Development Agency (ZDA)
ii. Zambia Bureau of Standards (ZABS)
iii. Competition and Consumer Protection Commission (CCPC)
iv. Zambia Weights and Measures Agency (ZWMA)
v. Patents and Companies Registration Agency (PACRA)
vi. Citizens Economic Empowerment Commission (CEEC)
vii Business Regulatory Review Agency (BRRA)
viii KAIZEN Institute of Zambia (KIZ)
ix. Zambia Compulsory Standards Agency
In view of is mandate and portfolio functions, the Ministry of Commerce, Trade and Industry is well positioned to implement President Lungu’s State of the Nation Address in March 2017 on national transformation and the objectives of the 7th National Development Plant regarding accelerating the diversification of the economy. The Mandate and portfolio of the Ministry in relation to President Lungu’s State of the Nation Address on national transformation and the objectives of the 7th National Development Plant are well timed in accelerating the diversification of the economy towards sustainable social economic development for the benefit of all Zambians.
Particularly, the goal of the Seventh National Development Plan (2017-2021) is to create a diversified and resilient economy for sustained growth and socio-economic transformation driven by, among others, agriculture, tourism, manufacturing and mining, at the same time pushing Government’s agenda of accelerating development efforts and attaining the Vison 2030, of becoming a prosperous middle income country by the year 2030 without leaving anyone behind. The Seventh National Development Plan is premised on five (5) pillars namely, Economic diversification and Job creation; Poverty and Vulnerability; Reduced Developmental Inequalities; Enhancing Human Development; and Conducive Governance Environment for Economic Diversification.
The coordination and implementation approach of the 7NDP links the vision, priorities, people’s aspirations and the physical institutions. Through an elaborate implementation and coordination framework, a system for accounting for development results will be established to help in informed decision-making.
The organisation of the Ministries, under the five strategic areas of the Plan, will be such that Ministries will identify their contributions to each key result area, which they will become a part of, through the Cluster Advisory Groups (CAGs). Ministries may become part of one or more of the CAGs depending on the extent of their engagement in contributing to the agenda of each particular outcome. The Ministries will coordinate the CAGs, through the leadership provided by a Permanent Secretary from among the Ministries who are members of the CAG. Directors from the member Ministries will form the result group that will operationalise the delivery of the respective strategic area.
In terms of accelerating the diversification of the economy, the Ministry has identified priority sectors to accelerate the diversification of the economy. These include Processed Foods; Textiles and Garments; Engineering Products; Wood and Wood Products; Leather and Leather Products; Mineral (metallic and non-metallic) processing and products (beneficiation); and Pharmaceuticals. These sectors have vast potential to spur economic diversification and achieve inclusive growth, through the opportunities available in promoting value addition at all stages of the value chains thereby creating wealth and employment. The Ministry through the Citizens Economic Empowerment Commission is implementing value chains as part of industrialisation and enhancing value addition.
QThe Government is doing great efforts to enhance the ease of doing business and to improve Zambia’s investment climate, having being ranked among the top-10 best African countries for business. You also recently stated your Ministry has an aggressive agenda to reform the business environment. How would you describe today’s investment and business environment?
The Ministry is responsible for creating a conducive policy and business environment that attracts private sector participation, both local and foreign and encourages the growth of anchor industries (supported by out grower schemes), particularly the prioritized manufacturing sub-sectors.
In this regard, Government implemented the Private Sector Development Reform Programme I and II from 2004 to 2014 aimed at improving the business environment and to reduce the cost of doing business. The PSD Reform Action Plan identified over 70 actions that needed to be addressed in order to make the environment supportive of private sector participation in the economy. In that regard, PSDRP fast - tracked and accelerated private sector reforms in a number of key sectors which led to an improved competitive business environment.
Some achievement of PSDRP Phase I and II included the following:
BUSINESS ENVIRONMENT REFORMS
A. PSRDRP PHASE ONE (2006 – 2009)
1. LEGAL AND POLICY REFORMS
Four Policies were approved
1. Public Private Partnership (PPP) Policy
2. Information and Communication Technology (ICP) Policy
3. Energy Policy
4. Micro, Small and Medium Enterprises (MSME) Development Policy
Ten Acts of Parliament passed by Parliament
1. Zambia Tourism Board Act
2. Tourism and Hospitality Act
3. Small Claims Court Act
4. Labour and Industrial Relations Act
5. Public Private Partnership (PPP) Act
6. Information and Communications Technology (ICT) Act
7. Postal Act
8. Electronic Communication Transaction (ECT) Act
9. Zambia Development Agency (ZDA) Act
10. Citizens Economic Empowerment (CEE) Act
2. INSTITUTIONAL REFORMS
Four Institutions, Two Departments and a Credit Guarantee Scheme created
1. Zambia Development Agency (ZDA)
2. Citizens Economic Empowerment Commission (CEEC)
3. Small Claims Court
4. Credit Reference Bureau
5. Public Private Partnership (PPP) Unit, Ministry of Finance
6. Department of Communications, Ministry of Communications and Transport
7. Credit Guarantee Scheme for SMEs under Development Bank of Zambia
8. International Gateway Liberalised and Gateway Fees reduced
9. Computerisation of Department of Immigration, Ministry of Lands and PACRA were computerised
B. PSRDRP PHASE TWO (2009 – 2014)
PRIORITY REFORM AREAS: Business Licensing; MSME Development; Labour and Productivity; PPP Development; Trade Expansion; Doing Business Reforms and Reform Communication.
DOING BUSINESS REFORMS
1. Starting a Business
• Starting a business has been eased by eliminating minimum paid up capital requirement by amending the Companies Act.
• Time to obtain VAT registration has been reduced to one day.
• ZRA consolidation of the entire Domestic Taxes into one Department to increase efficiency.
2. Trade Across Boarders
• ZRA has introduced a pre-clearance system which enables goods to be cleared before arrival at the port of entry. This has contributed to faster clearance time.
• One Stop Boarder Post at Chirundu started operating in November, 2009. A Bill is in place. All Agencies involved in the customs clearing at Chirundu are housed in one building.
• Two Scanners were purchased for use at Chirundu and Livingstone Borders to scan goods.
• Customs clearance takes three days for import
• Customs clearance takes one day for export
• Simplified Trade Regime has been introduced through COMESA and Zambia-Malawi and Zambia-Zimbabwe are using the scheme. This scheme takes care of Small Cross Boarder Traders who have goods worth US$500 or less.
3. Getting Credit
• Bank of Zambia has instructed all Commercial Banks to use the Credit Reference Bureau (CRB) when giving out any loans. Banks fluting these instructions will attract regulatory action and punitive measures. 44 Financial Institutions are providing data to CRB and 4.5% of adult population registered by CRB.
• Draft Credit Referencing Bill finalised.
4. Dealing with Construction Permits
• A business does not need an EIA for low risk-construction Projects like construction of a warehouse for storage of non-hazardous material.
• Lusaka City Council issues approvals in principle, allowing construction to proceed even before the Building Committee meets to carry out the formal approval
5. Registering Property
• The Property Tax Transfer Forms are available on the ZRA website.
• The ZRA Client Service Desk at Ministry of Lands has been electronically linked to the main ZRA system for quick processing of tax clearance and change of property ownership.
6. Paying Taxes
• The VAT registration process has been streamlined by empowering the Taxpayers’ Service Department to complete the whole process of registration. It now takes an average of 3 days to register for taxes with ZRA against the Taxpayers Charter commitment of 3 days. The performance against the Charter commitment is monitored on a quarterly basis and published.
• The E- Payment Scheme has been launched in conjunction with Access Bank Limited. This allows taxpayers to pay their taxes online.
7. Enforcing Contracts • The Judiciary in conjunction with Investment Climate Facility for Africa has launched electronic case management system. With this system, Judges, Lawyers the press and the public can follow proceeding expeditiously.
• The Small Claims Court was launched by the President in June, 2009. The Small Claims Court is a fast track Court dealing with amounts of K20, 000.00 or less. The setting up of this Court has reduced pressure on the High Court and Subordinate Courts. The Court has also been opened in Ndola and Kitwe on the Copperbelt Province.
OTHER BUSINESS ENVIRONMENT REFORMS
• 170 licenses are earmarked for elimination. As of 1st October, 2010, 87 licenses in total were eliminated (49 licenses were eliminated through various laws while 38 Local Authority licenses were eliminated and reclassified as a single direct levy).
• Revenue Impact Study of licensing reform was completed which showed impact on revenue not significant.
• E-Registry Unit at ZDA set up.
• One Stop Shop (OSS) for business registration under ZDA set up
• PACRA developing an online name search system.
• One Stop Boarder Post at Chirundu established.
• Government approved the setting up of One Stop Boarder Post an Nakonde.
• A Simplified Trade Regime adopted by Zambia for trade across borders for MSMEs.
• As e-payment system is in use at Ministry of Finance
• ZRA is developing a Single Electronic Window Portal for Trade Facilitation.
• Ministry of Lands developing standardised documents for property transfer and ensuring security features are enhanced for Title Deeds.
• The Companies Act and Town and Country Planning to be reviewed
As a result of these reforms, Zambia has made tremendous improvement in creating a conducive business environment as per World Bank 2018 Doing Business Report. The Report shows that Zambia’s ranking has not only improved from 98th to 85th on the Ease of Doing Business, but is also one of the top ten (10) improved regulatory reform economies in the world. In that regard, therefore, Zambia is among the best destinations for investment and is open to receive investors.
QPresident Lungu said that a strong partnership is a necessity between Government and the private sector. How smooth is the dialogue between the different stakeholders in Zambia?
Zambia has public-private dialogue structures and partnerships, such as the Zambia Business Forum, Zambia International Investment Forum, Private Sector Development and Competitiveness Reform Implementation, and Private Sector Policy Dialogue Promotion, among others. However, the private sector has proposed a more enhanced approach of these structures at high level to promote dialogue, exchange of ideas and facilitate the growth of the private sector and the economy in general.
Q You also stated the need to position Zambia’s industry to become a key regional player, or you will be faced with high levels of imports into the country. How is the Government working towards industrialisation, value addition and making Zambia’s industries regionally competitive?
Many developing countries are trying to diversify their economies and are reducing economic dependence on primary commodities. This does not exclude Zambia, which is still largely dependent on copper for about 70% of its foreign exchange earnings. This has left the country highly vulnerable to the global shifts in the performance of commodity prices on the global market.
In that regard, Government has embarked on an industrialisation agenda aimed at transforming and diversifying the economy through value addition to its abundant natural resources. To that effect, one of the focus areas is the creation of a globally competitive business environment and a strong private sector through private sector development (PSD).
Some of the measures put in place to industrialise include: establishment of Multi-Facility Economic Zones and Industrial Parks for heavy and light industries engaged in value addition respectively, establishment of Industrial Clusters, Value Chain Development including Rural Industrialisation.
Further, the Ministry is in the process of finalising the Industrial Policy whose implementation is expected to stimulate and encourage value addition activities on primary commodities as a means of increasing national export earnings and creating employment opportunities. This will ultimately transform the Zambian economy into a diversified and competitive industrialised economy which is well integrated into the international trading system.
In addition, the Ministry formulated the Micro, Small and Medium Enterprise (MSME) Development Policy to transform the MSME sector into strong value-creating entities and harnessing human innovation for inclusive growth and provide opportunities for improving the well-being of Zambians at all levels. In this regard, the Ministry has embarked on Value Chain Development Programmes using cooperative structures and is providing affordable financing through the Citizens Economic Empowerment Commission to value adding local enterprises. The Ministry also formulated the National Quality Policy and is re-engineering the National Quality Infrastructure in order to promulgate standards and adhere to international best practices if we have to produce goods and services that can compete competitively at international markets. In order to increase the number of women and youths participation in productive sectors, the Ministry, through the Citizens Economic Empowerment Commission, with support from the African Development Bank, has made available USD 30 million for cassava value chain development and construction of Industrial Yards in designated areas for light manufacturing targeting metal fabrication, wood works, agro-processing, gemstone processing and automotive works including the manufacturing of motor spares. Further, Industrial Yards will facilitate Micro, Small and Medium Enterprises’ access quality business advisory services, finance and linkages with financial institutions.
The Ministry with support from the World Bank has also made available UDS 40 million through the Zambia Agribusiness and Trade Project to be used to increase market linkages and firm growth in agribusiness for poor and emerging farmers and SMEs.
Q How are you encouraging private sector involvement, what advantages and incentives will they find in Zambia?
Government is encouraging the private sector to be involved in economic activities through designing and implementing policies to encourage inclusive growth or economic transformation through investment, productivity growth, business expansion and employment. The advantages that the investors would be attracted to invest in Zambia include: Stable Political System, Positive and investor friendly economic environment, Investment guarantee and securities, abundant natural resources presenting excellent investment and trade opportunities, attractive investment incentives as provided for under the ZDA Act No. 11 of 2006, duty free access to regional, wider Africa, EU and USA Market, Progressive banking, legal and insurance services of international standards and stock exchange, and good place to work and live and friendly people with a rich culture.
Q Zambia is rolling the Private Sector Development Reform Program out. How will it help, amongst others, the SME sector?
Under the Private Sector Development Reform Program, MSMEs will benefits in many ways such as implementation of key reforms dealing with business licensing and regulation, Trade Facilitation, trade logistics, MSME development, business reforms including Ease of Doing Business as stated under Question 3 above.
QBritish High Commissioner Fergus Cochrane-Dyet said in August, “British companies like Tullow Oil represent reliable partners for Zambia because they are covered by UK legislation that binds them to the highest standards.” What PPPs and investment opportunities would you like to convey to The Times’ high profile audience?
Investment Opportunities and PPPs include the following:
1. Construction of the Jubilee City at the Ridgeway area in Lusaka
2. Establishment of Copper City as value addition enterprises MFEZ
3. Dual carriageway from Kazungula via Livingstone to Kafue (488km)
4. Dual carriageway from Chirundu Border to Chilanga in Lusaka (124km)
5. Construction of the PPP Unit Office Block, land soon ready for development
6. Construction of ZNBS Housing Projects (Chilanga/Nyimba) through PPPs
7. Private railway developments (Northwest rail, Serenje-Chipata rail,
Livingstone-Katima Mulilo rail, Nseluka-Mpulungu rail)
8. Computer Assembly and Software Development Plant in Lusaka South MFEZ
9. Building and Technical infrastructure for establishment of Technical Colleges
11. Construction of Grain Storage facilities to support FRA and FISP
12. Construction of Specialist Hospitals (Medical Tourism/Levi conversion)
13. Re-development of the Longacres Lodge into a five star hotel
14. Upgrading of NRDC to University status (infrastructure, equipping)
15. 3-Star Hotel/Conference Facility/Office Block, National Museum Board
16. Establishment of Hotels in National Parks – Private, Hotels – Livingstone, 250 bed capacity and Kafue South National park – 250 beds
17. Meat Processing/Cold Storage for Small Scale farmers in Farm Blocks
18. Edible Oils, Food Processing
19. Milk Collection Centres for Small Scale farmers in Farm Blocks
20. Residential Housing Development Projects in the Lusaka South MFEZ
21. Development of Farm blocks (100,000ha) in all the ten Provinces;
21. Tourism: International Conference Centre's - Mulungushi – 19.2 ha and Livingstone – 16Ha;
22. Mineral Processing: Copper, Cobalt, Gemstones
23. Light Engineering: Agriculture and Equipment
Q Zambia and the U.K. have long enjoyed healthy and mutually beneficial relations and bilateral relations are becoming stronger and better every year. Indeed, business links are constantly growing with encouragement from both parties to further explore business opportunities. UK Minister for Africa Rory Stewart said last week during his visit that Zambia has been an important friend and partner for the UK for many decades and that he is looking forward to working closer with Zambia. What is your overview on the relations of both nations and where would you like to see a stronger cooperation?
Zambia and UK have long standing warm and cordial bilateral relations. We would like to explore more trade and investment cooperation including in other sectors such as political, cultural, social and economic.
Q President Lungu recently stated, “The time to act is now and we will therefore, need to be bold and decisive.” With this statement in mind, what is Hon. Minister Mwanakatwe’s vision?
In Zambia’s quest to restore fiscal fitness for sustained inclusive growth and development, President Edgar Lungu affirmed that the time to act is now, adding that, “we will therefore, need to be bold and decisive.”
The President was reflecting on developments in the last decade in the “Foreword” of the recently disseminated “Economic Stabilization and Growth Programme 2017-2019, Zambia Plus.” The President observed that there were turbulences in Zambia’s development agenda which made it difficult to implement long-term policies for sustained economic stability and higher growth. The President indicated that Government was committed to the achievement of a fiscal balance as it was a critical step in getting the economy back towards a growth trajectory that was more sustainable and inclusive.
The President further indicated that stakeholders had agreed that the task of restoring stability and accelerating growth came with its own challenges adding that, “turning the economy around and improving the lives of the people required to make hard choices and implement appropriate reforms. “The time to act is now and we will therefore, need to be bold and decisive.”
You may wish to note that the economic environment in which the 2017 budget had been executed and the subsequent Government budgets implementation would be challenging. This is on account of anticipated continuation of subdued growth in the global economy and domestic shocks which may constrain production and general economic activities.
This reality means that we have to act decisively to address the challenges we face in order to restore economic stability through unity and hard work. It is in this regard that Government had developed the ‘Economic Stabilization and Growth Programme (ESGP)’ for the period 2017 to 2019 dubbed “Zambia Plus.” The document serves as the Medium Term Expenditure Framework (MTEF) for the period 2017-2019.
As Minister of Commerce, Trade and Industry, I and my staff shall work hard towards achieving the set concrete actions required to restore fiscal fitness, so as to reinvigorate the economy after a few years of sluggish growth. This is embodied in the theme of the document, “Restoring Fiscal Fitness for Sustained Inclusive Growth and Development”.
The Economic Stabilisation and Growth Programme (ESGP) which is an anchor to the Seventh National Development Plan (7NDP), 2017-2021, has five key pillars. These are:
1.0 Restoring credibility of the budget by minimising unplanned expenditures and halting the accumulation of arrears;
2.0 Enhancing domestic resource mobilisation and refocusing of public spending on core public sector mandates;
3.0 Improving our economic and fiscal governance by raising the levels of accountability and transparency in the allocation and use of public finances;
4.0 Ensuring greater economic stability, growth and job creation through policy consistency to raise confidence for sustained private sector investment; and,
5.0 Scaling-up Government’s social protection programmes to shield the most vulnerable in our society from negative effects of the programme.
As a Ministry, we shall pursue Pillar 4 to which we are directly involved which is ‘Ensuring greater economic stability, growth and job creation through policy consistency to raise confidence for sustained private sector investment.’ This regard, as Ministry, we shall pursue industrialization through programmes such as development of MFEZ/Industrial Parks/ Industrial Cluster/Yards and Value Chain Development, value addition and economic diversification. However, the successful attainment of all the Pillars shall require concerted efforts from all line Ministries and all stakeholders.
Q You have a vast experience in the Private Sector, having had top management positions in banks in Zambia, Ghana or Nigeria. How is your previous experience in the private sector helping you to face the challenges you have now regarding the nation’s economic development?
I like confronting challenges head on. In that way, I tend to learn more on how to resolve them. Given the scale of the fiscal and economic challenges we are facing, we need a coordinated approach based on realistic solutions that will be supported by all stakeholders including our Cooperating Partners.
In terms of restoring fiscal fitness for sustained inclusive growth and development, this will be best done through curbing unproductive expenditure while raising domestically generated revenues. Monetary policy shall be re-aligned to Government’s fiscal consolidation measures without compromising inflation and growth objectives. To unlock economic activity, as Government, we shall be required to work towards dismantling arrears owed to suppliers of goods and services, as well as contractors and remain within sustainable debt levels. This will unleash resources to the private sector to engage in economic activities that we produce reasonable returns on their investments.
As a Ministry, we shall continue to pursues economic diversification and industrialization through value addition, establishment of Multi Facility Economic Zones, Industrial Parks and development of Value Chains in order to unlock the economic potential in all the sectors of the economy. Consistent with the 7NDP, emphasis will be put on agriculture, tourism, energy, mining, as the basis for diversification. Access to markets, ICT and infrastructure development shall be emphasized as key growth enablers.
Q As there is a huge competition amongst African countries to attract the much-needed FDI, what confidence message would you like to convey to the international community about Zambia?
Zambia is an attractive and preferred investment destination. This is because Zambia has the following attributes: Stable Political System, Positive and investor friendly economic environment, Investment guarantee and securities, abundant natural resources presenting excellent investment and trade opportunities, attractive investment incentives provided for under the ZDA Act No. 11 of 2006, duty free access to regional, wider Africa, EU and USA Market, Progressive banking, legal and insurance services of international standards and stock exchange, and good place to work and live and friendly people with a rich culture.