Export Processing Zones are designed as a key incentive to attract investors into Zambia

Floriculture and horticulture are increasingly important non-traditional sectors in Zambia’s export market. Europe provides a thriving market for Zambian roses

In recent years there has been a significant increase in the establishment of exporting companies as a result of Zambia’s improved macroeconomic environment and liberalizing reforms. Although copper and cobalt are still Zambia’s principal exports, non-traditional products are performing strongly. In both 2001 and 2002 the non-traditional export (NTE) sector recorded an 18 percent increase, reaching US$312 million and US$368 million respectively. The highest earners in 2002 were agriculture, horticulture, and gemstones.

Growth in exports has been stimulated by the Export Board of Zambia (EBZ), which was set up in 1987 to promote the sector. Its mission is to broaden the country’s export base and increase foreign exchange earnings by providing accurate market information, expanding Zambia’s share of the global market, positioning non-traditional exports in target markets, and lobbying the government to offer incentives.

CEO of the Export Board of Zambia

The current range of export incentives offered by the state includes reduced corporate tax for non-traditional exporters. In addition, the government has simplified the export licensing system, abolished export duties, and reduced customs tariffs as part of a set of measures taken to create a favorable environment for export development.

“Zambia has abundant natural resources and a fairly developed infrastructure for production of non-traditional exports,” says Glyne Michelo, CEO of EBZ. Mr. Michelo highlights primary agricultural products as one of Zambia’s strongest exports, adding that manufacturing also yields a variety of output; this comprises food-processing, which adds value to agricultural materials such as coffee, sugar, cashew nuts, cotton, and tobacco. Chemical products, leather, and local handicrafts are also among the range of up-and-coming exports.

EBZ is eager to position Zambia in the U.S. market and has developed contact programs with key market players in America in addition to attending trade events. “There’s tremendous potential for Zambian NTEs to grow in the U.S. market,” says Mr. Michelo.

Managing Director of ZEPZA
Minister of Commerce, Trade and Industry

EBZ has played an important role in the establishment of the Zambia Export Processing Zones Authority (ZEPZA), which is leading the development of Export Processing Zones (EPZs) to enhance the international competitiveness of Zambian companies. Established as part of the EPZ Act of 2001, ZEPZA cultivates non-traditional exports in three particular sectors: agriculture, agri-business, and manufacturing. The zones themselves are regarded as foreign territories and consequently don’t pay taxes, apart from those paid on goods sold in the domestic market.
Fabiano Lukashi, Managing Director of the authority, explains that the EPZs could lead to the structural transformation of the Zambian business landscape.

“We will be able to create chains of EPZs - when an EPZ exports textiles to the U.S., its fabric supplier also becomes an EPZ and so does the yarn supplier. The zones create backward and forward linkages in the economy.”
ZEPZA will help companies build their own zones and will therefore have to seek financing to provide these EPZs with their own infrastructure. The provision of licenses and permits, plus tax exemptions on utilities, are also an important part of the range of incentives offered to investors seeking to start up ventures in Zambia. Mr. Lukashi believes that Zambia’s favorable business and investment climate, high levels of education, central location, and natural resources will be key attractions for American investors.

Dipak Patel, Minister of Commerce, Trade and Industry, highlights that strengthening the export sector is fundamental for the future of Zambia. For the country to fully realize its export potential it “is a question of foreign and domestic investment into basic infrastructure, technologies, and setting up the basic standards for export purposes.”

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