Located in the south central Africa, Zambia is a landlocked country covering an area of about 752,614 sq. km. It is bordered by Tanzania (in the North), Malawi (in the East), Mozambique (in the South-East), Zimbabwe (in the South) Botswana and Namibia (in the South-West), Angola (in the West) and Democratic Republic of Congo (in the North-West). Zambia, with Lusaka as the capital and English as the official language, has an estimated population of 12.2 million (2007 estimate) and its annual population growth rate is estimated at 2.5 percent.
Most of Zambia consists of high plateau varying between 1000 and 1600 meters above sea-level. It is a typical savanna country with three seasons: cool and dry season (from May to August), hot and dry season (from September to October), and rainy season (from November to April). Zambia has the annual average temperature of 21 Celsius, and the annual average rainfall of 1,270 millimeter.
Zambia’s Investment Climate
The country’s political turnaround from one-party socialist to a multiparty democracy in 1991 was accompanied by fundamental change in economic re-orientation. The Zambian Government embarked on drastic economic reforms whose immediate priority was stabilization of major macroeconomic indicators, encouraging the private sector and the State withdrawing from running enterprises.
Multi-facility Economic Zones
The Multi- Facility Economic Zone (MFEZ) falls under the auspices of the Triangle of Hope (ToH) initiative, which was introduced to Zambia in 2005 by the Japanese Government through Japan International Corporation Agency (JICA).
The ToH initiative is aimed at creating the platform for Zambia to achieve economic development by attracting significant domestic and foreign direct investment (FDI) through a strengthened policy and legislative environment.
Status on the Development of MFEZs/Industrial Parks
The development of the Chambishi MFEZ is being undertaken by China Non Ferrous Metal Mining Company Limited (CNMC). This is pursuant to action points within the framework of forum on China – Africa Cooperation (FOCAC) where the Chinese President, His Excellency, Mr. Hu Jintao committed to develop five (5) trade and economic zones in Africa from the period 2007 to 2009. Zambia was selected as the first African country to benefit from this commitment. The Chambishi MFEZ has already housed fourteen (14) enterprises with a total investment outlay of more than US$ 800 million. These enterprises have provided more than 5,600 local jobs which are expected to increase as more zone enterprises locate in the MFEZ.
Main Conditions of MFEZ
An investor may require to provide and maintain in a multi facility economic zone standard infrastructure, facilities, readymade standard factory buildings, warehouse, factory space, telecommunication, water & sewerage net works, uninterrupted power supply source, internal roads, and waste water treatment and such other facilities as are required for the effective and efficient operations of the multi-facility economic zone.
A business enterprise may, in accordance with the conditions attached to its licence, produce for export or local market, any of the goods or services specified in the licence.
An investor shall not, within a multi facility economic zone, carry on any activity not authorized by the licence or permit
MFEZ Application Procedure
Documentations required for application are:
(a)a certified copy of the articles of association;
(b)a certified copy of the certificate of incorporation;
(c)a certified copy of the certificate of share capital;
Types of Authorisation
There are two ways of operating in an MFEZ
(a)Where a company desires to develop a multi facility economic infrastructure, the company is required to submit an application for a permit to develop a multi-facility economic zone and follow the guidelines as provided in the Multi-Facility Economic Zones (General) Regulations.
(b)Where a company desires to locate in a multi-facility economic zone so that it is granted a multi-facility economic zone status, the company is required to submit an application for a licence to operate a business enterprise in a multi-facility economic zone.
Location of MFEZ
An investor is free to identify and suggest any other location in the country deemed economical for such development. Government has however, prioritised the following areas for the development of MFEZs: Lusaka, Ndola, Mpulungu, Chembe, Nakonde, Kasubalesa and Mwinilunga.
Qualification criteria to locate in a Multi-Economic Facility Zone
Any investor be it foreign or local qualifies to develop multi-facility economic zone or operate in an existing Multi Facility economic zone upon demonstrating that the investment will provide the following benefits:
i.the level of local and foreign direct investment;
ii.the attraction of local and foreign indirect investment;
iii.the amount and quality of local employment creation;
iv.the extent of skills development and transfer to local entrepreneurs and communities;
Companies approved under ZDA priority sectors will be given the following incentives:
Zero percent tax on profits made by companies in the priority Sector for a period of 5 years from the first year profits are made. For years 6 to 8 only 50% of profits should be taxed and for years 9 and 10, 75% of profit should be taxed;
Zero percent tax rate on dividends of companies operating under the MFEZ/priority sector for a period of five years from the year of first declaration of dividends.
Zero percent import duty rate on raw materials, capital goods, machinery including trucks and specialized vehicles for five years.
Deferment of VAT on machinery and equipment including trucks and specialized motor vehicles imported for investment in MFEZ and/or priority sector.