Mining is primarily regulated by the Mines and Minerals Development Act, No. 11 of 2015 and the Mines and Minerals (General) Regulations of 2016. For a company to hold a mining right, it must be incorporated in, and have a registered office in Zambia.
A company that has directors or shareholders (with more than ten (10) per cent equity) who are bankrupt or have been convicted of fraud in the five (5) years preceding an application for a mining right is not eligible to obtain a mining right in Zambia.
Mining accounts for seventy (70) per cent of the Zambia's export earnings, with copper being its main export. Other minerals produced in Zambia are cobalt, nickel, gold, zinc, lead, limestone, uranium, etc. The global shift towards renewable energy and green technologies has led to a high demand for copper, cobalt and other minerals used in these sectors.
The mining sector accounts for a significant share of the country's foreign direct investment and government revenue and remains the largest costs of the winding-up; employee salary arrears and other benefits owed to employees; and taxes and other duties payable to the local authority or Government. (a) (b) (c) 5 | Doing Business in Zambia contributor to the country's GDP. In 2021, mining contributed to 17.5 per cent of Zambia's GDP and over seventy (70) per cent of foreign exchange earnings. Mining also significantly contributes to the employment sector, both directly and indirectly.
The Government policy on mining is to introduce measures aligned with international best practices that are mutually beneficial to investors and the country in general. One such measure was the reintroduction in 2022 of the deductibility of mineral royalty tax as an expense for corporate tax purposes. The Government has also embarked on diversifying the mining sector. In line with this, Africa's largest nickel mine is set to commence commercial production in 2023 in the Western province of the country. Coal and manganese mines have also been opened in Southern and Luapula Province respectively.
The country has set a target of increasing annual copper production from 800,000 metric tonnes to 3 million metric tonnes by 2030.
The agricultural sector contributes approximately nineteen (19) to twenty (20) per cent of the country's GDP, and twelve (12) percent of national export earnings. The Eighth National Development Plan has identified agriculture as one of the key drivers for economic transformation and job creation. The promotion of agricultural mechanisation, agribusiness development and interventions in fisheries are expected to have an increased contribution to GDP.
Acquisition of land for agriculture and other activities is discussed under the "Acquisition of land" section further below.
Zambia is endowed with abundant freshwater resources for irrigation and arable land for cultivation, with favourable weather conditions and a readily available domestic and international market. The agricultural sector in Zambia supports livelihoods of seventy (70) percent of the population and is the main source of income and employment for majority of persons living in rural parts of the country.
The sector comprises crop production, livestock and fisheries. Domestic production is dominated by maize which is the staple food. Maize accounts for more than sixty-five (65) per cent of the cropped land. Other important crops include sorghum, millet and cassava. Exports are driven by sugar, soybeans, coffee, groundnuts, rice and cotton.
The energy sector is one of Zambia's most important sectors for economic and social development. The Eighth National Development Plan identifies the energy sector as one of the key strategic interventions to support economic transformation and job creation. The primary legislation regulating the sector are the Energy Regulation Act, No. 12 of 2019 and the Electricity Act, No. 11 of 2019.
Zambia is energy resource self-sufficient, with approximately 3,456.8 megawatts (MW) of installed electricity generation capacity. However, approximately eighty-five (85) per cent of Zambia's generated electricity is generated from hydroelectricity. The dependence on hydro-power means that Zambia is vulnerable to the effects of climate change and periods of drought and low rainfall affect the security and reliability of production. Other energy sources include coal, biomass and solar. Government policy is to diversify the electricity sector to reduce the dependence on hydro-power.
ZESCO Limited is the national utility company responsible for the generation, transmission and supply of most of the electricity. Other players include Copperbelt Energy Corporation Plc which supplies electricity to most of the mines and also exports to the Democratic Republic of Congo. A recent market entrant is the Africa Green Group that acts as an intermediary offtaker, purchasing from renewable IPPs and selling to commercial and industrial users and on the Southern Africa Power Pool trade.
Zambia's demand for energy has steadily grown with the increase in population, manufacturing, agriculture, real estate and mining activities. However, it is estimated that national access to electricity averages at thirty-one (31) percent, with only sixty-seven (67) percent of the urban population and four (4) percent of the rural population having access to power.
Following the droughts experienced between 2015 and 2017 in the Southern African region, Zambia experienced power deficits due to the over-dependence on hydropower. This resulted in increased investment in alternative sources of energy to achieve a balanced energy mix. Alternative sources of energy such as solar energy are being encouraged through tax incentives for solar equipment. Zambia has an average of 2001-3000 hours of sunshine per year and has great potential for the growth of the solar energy industry.
Increased investments in the energy sector are expected to result in an increase in electricity generation to approximately 4,500 MW by 2026. In terms of petroleum, the current demand for petroleum products in the country is approximately fifty-two (52) million litres per month. With the growing economy, this demand is projected to grow at an average rate of about forty (40) percent per annum. Zambia imports all its petroleum products.
Tourism is a prominent part of the Zambian economy and is a significant source of employment and foreign exchange. It is mainly regulated under the Tourism and Hospitality Act, No. 13 of 2015. The Act provides that the Minister of Tourism is responsible for the development of sustainable tourism that is economically, culturally, socially and environmentally sustainable and which maximises socio-economic benefits, job creation and local investment opportunities for Zambians and their national heritage.
Zambia's main tourist attractions are its waterfalls (Victoria falls, Kalambo falls, Ngonye falls, etc.), wildlife and national museums. The Victoria falls, located in Livingstone and locally known as the "Mosi-oa-Tunya" (which translates to 'the smoke that thunders') are the largest curtain of falling water in the world, measuring nearly two (2) kms with a height of 100m and are one of the seven wonders of the world.
Approximately thirty (30) per cent of Zambia is reserved for wildlife conservation with twenty (20) national parks and thirty-four (34) game management areas. Additionally, Zambia has a rich and diverse culture and tradition, and provides a display of various traditional ceremonies that happen at different times of the year. The Kuomboka and N'cwala are two of the most popular traditional ceremonies celebrated in Zambia.
The Government recently announced measures to promote increased investment in the tourism sector. These measures include a review of the licensing framework, the construction of necessary infrastructure and a review of the regulatory framework that will make private sector investment attractive.
The manufacturing industry is one of Zambia's priority sectors and has been identified as a key driver for economic transformation and job creation under the Eighth National Development Plan. The sector accounts for approximately of 7.2 per cent of Zambia's GDP.
The sector is primarily characterised by low-value manufactured products such as food, beverages and base metals. However, with a renewed focus on industrialisation and economic diversification, the Government has prioritised a shift to value addition and light manufacturing that is labour intensive with low capital requirements and a production of highvalue goods for final consumption. The value chain development for processed foods, engineering, wood and wood products, textiles, leather and leather products, metallic and non-metallic mineral beneficiation and value addition and pharmaceuticals is considered to have potential for growth. The manufacturing sector is expected to increase its share of non-traditional exports to 55 per cent by 2026 from 44 per cent in 2020.
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