2012 Investment Climate Statement - Zambia

2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012

Openness To, and Restrictions Upon, Foreign Investment

The GRZ actively seeks foreign investment through the Zambia Development Agency (ZDA), which was established in January 2007 through the consolidation of a number of trade and investment promotion entities into a one-stop resource for international investors interested in Zambia.

The major laws affecting foreign investment in Zambia include:

--The Zambia Development Agency Act of 2006, which offers a wide range of incentives in the form of allowances, exemptions and concessions to companies.

-- The Public-Private Partnership Act of 2009 established a PPP Unit under the Ministry of Finance and National Planning to promote and facilitate privately financed infrastructure projects and effective delivery of social services.

--The Companies Act of 1994, which governs the registration of companies in Zambia.

--General incentives to investors in various sectors are provided in assorted legislation that governs the Zambia Revenue Authority (ZRA), including the Customs and Excise Act, Income Tax Act of 1966 and the Value Added Tax Act of 1995.

--The Employment Act Cap 268, Zambia’s basic employment law that provides for required minimum employment contractual terms.

--The Immigration and Deportation Act Cap 123, which regulates the entry into and residency in Zambia of visitors, expatriates and immigrants.

The Zambian judicial system has a mixed record in upholding the sanctity of contracts. The judicial process is lengthy and inefficient. Many magistrates lack experience in commercial matters.

No distinction exists in Zambian law between foreign and domestic investors. Investors are free to invest in any sector of the economy and are entitled to incentives provided through the ZDA Act of 2006 (discussed later in this report). In the privatization process, foreign investors are eligible to bid on state-owned companies. Non-Zambians may also invest in the Lusaka Stock Exchange without restriction and on terms comparable to those Zambians receive. Companies seeking licenses or concessions or investors bidding for privatized companies are encouraged to seek local partners, although it is not clear how such commitments are weighed when decisions are made by the ZDA.

The ZDA board screens all investments for which incentives are requested and usually makes its decision within 30 days. The reviews appear routine and non-discriminatory, and applicants have the right to appeal the investment board decisions. The ZDA board is comprised of sixteen members, including representatives from various government and private sector stakeholders.

An investment can be subject to review for determination of sector or value, and filing is mandatory. An investment application is subjected to screening mechanism, among other things, to determine the extent to which the proposed investment will help create employment and the development of human resources; the degree to which the project is export oriented; the impact the proposed investment is likely to have on the environment and, where necessary, the measures proposed to deal with an adverse environmental consequence, in accordance with the Environmental Protection and Pollution Control Act; the possibility of the transfer of technology; and any other considerations that the Board considers appropriate.

The possible outcome of the review could be prohibition or imposition of additional requirements, especially where adverse environmental issues arise. The reviews are generally completed in a timely manner.

An investor may, within fourteen days of receiving a Board decision, appeal the decision to the Minister of Finance and National Planning. Within thirty days of receiving the appeal, the Minister may confirm, set aside or amend the decision of the Board. An investor dissatisfied with the decision of the Minister may, within thirty days, appeal to the High Court of Zambia against the decision. No negative reports have been received from U.S. firms concerning this process.

The ZDA Act does not discriminate against foreign investors, and all sectors are open to both local and foreign investors. The Citizens’ Economic Empowerment Commission is working with the Zambia Public Procurement Authority to implement preferential procurement that would support Zambian-owned and based firms.




TI Corruption Index



Heritage Economic Freedom



World Bank Doing Business



MCC Gov’t Effectiveness


0.23 / 69%

MCC Rule of Law


0.45 / 77%

MCC Control of Corruption


0.27 / 77%

MCC Fiscal Policy


-2.0 / 58%

MCC Trade Policy


82.4 / 95%

MCC Regulatory Quality


0.24 / 69%

MCC Business Start Up


0.969 / 81%

MCC Land Rights Access


0.631 / 55%

MCC Natural Resource Mgmt


64.40 / 58%

Conversion and Transfer Policies

There are currently no restrictions on converting or transferring funds associated with an investment (including remittances of investment capital, earnings, loan repayments and lease payments) into freely usable currency and at a legal market-clearing rate. Investors are free to repatriate capital investments, as well as dividends, management fees, interest, profit, technical fees, and royalties. Foreign nationals can also transfer and/or remit wages earned in Zambia without difficulty. No exchange controls exist in Zambia for anyone doing business as either a resident or non-resident. Additionally, there are no restrictions on non-cash transactions.

Over-the-counter cash conversion of the local currency, the Kwacha, into foreign currency is restricted to a USD 5,000 maximum per transaction for account holders and USD 1,000 for non-account holders. No changes or plans to change are in the offing regarding remittance policies affecting foreign exchange for investment remittance.

Investors can remit through a legal parallel market, including one utilizing convertible, negotiable instruments, and there is no limitation on the inflow or outflow of funds for remittances of profits, debt service, capital, capital gains, returns on intellectual property, or imported inputs. There are no surrender requirements for profits earned overseas. Zambia intends to issue a USD 700 million Eurobond in 2012.

Expropriation and Compensation

Investments may only be expropriated by an act of Parliament relating to the specific property expropriated. Although the ZDA Act states that compensation must be at a fair market value, the method for determining fair market value is ill defined. Compensation is convertible at the current exchange rate. The ZDA Act also protects investors from being adversely affected by any subsequent changes to the Investment Act of 1993 for seven years after initial investment.

Leasehold land, which is granted under 99-year leases, may revert to the government if it is ruled to be undeveloped after a certain amount of time (generally five years). Land title is sometimes questioned and land is re-titled to other owners.

No expropriatory action has taken place in the recent past nor policy shifts that would lead Post to believe there may be expropriatory actions in the near future. The GRZ does not discriminate against investors or U.S. investments, companies or representatives in expropriation.

Dispute Settlement

Relatively few investment disputes have occurred involving U.S. companies since the economy was liberalized following the introduction of multi-party democracy in 1991. The Zambian Investment Code stipulates that claimants must first file internal dispute settlements with the Zambian High Court. Failing that, the parties may go to international arbitration, which the state recognizes as binding. Zambia is a member of the International Center for the Settlement of Investment Disputes (ICSID) and the United Nations Commission of International Trade Law (UNCITRAL).

Previous disputes involved delayed payments from state-owned enterprises to U.S. companies for goods and services and the delayed deregistration of a U.S.-owned aircraft that was leased to a Zambian airline company that went bankrupt.

The courts in Zambia are somewhat independent, but contractual and property rights enforcement is weak, and final court decisions can take a prohibitively long time. The Foreign Judgments (Reciprocal Enforcement) Act, Chapter 76, of the Laws of Zambia (cited as the Act) makes provision for the enforcement in Zambia of judgments given in foreign countries that accord reciprocal treatment. The registration of a foreign judgment is not automatic. In 2010, a Lusaka High Court Judge ruled that a London civil judgment against former president Frederick Chiluba could not be registered in a Zambian court, despite precedent.

The Bankruptcy Act Cap 82 of the Laws of Zambia provides for the administration of bankruptcy of the estates of debtors and makes provision for punishment of offenses committed by debtors. It also provides for reciprocity in bankruptcy proceedings between Zambia and other countries and provides for matters incidental to and consequential upon the foregoing. This applies to individuals, local and foreign investors. Bankruptcy judgments are made in local currency, but can be paid out in any international convertible currency.

The Zambian Arbitration Act No. 19 of 2000 applies to both domestic and international arbitration and is based on the UNCITRAL Model Law. Arbitration agreements must be in writing. Parties may appoint an arbitrator of any nationality, gender or professional qualifications. Foreign lawyers cannot be used to represent parties in domestic or international arbitrations taking place in Zambia. There are no facilities that provide online arbitration, although there is an arbitral institution, the Zambia Institute of Arbitrators. Arbitration awards are enforced in the High Court of Zambia, and judgments enforcing or denying enforcement of an award can be appealed to the Supreme Court. On average, it takes about 14 weeks to enforce an arbitration award rendered in Zambia, from filing an application to a writ of execution attaching assets. It takes about 18 weeks to enforce a foreign award. Contracts involving state entities commonly rely upon arbitration as a dispute resolution tool.

Zambia is party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, which entered into force on June 7, 1959, and party to the Convention of the Settlement of Investment Disputes between States and Nationals of Other States of 1965 and entered into force on October 14, 1966. These are being enforced through the Investment Disputes Convention Act Cap 42 of the Laws of Zambia.

Performance Requirements and Incentives

The GRZ strives to be consistent with Trade Related Investment Measures (TRIMs) requirements and generally abides by the WTO’s TRIMs obligation.

The ZDA Act of 2006 offers a wide range of incentives in the form of allowances, exemptions and concessions for companies, which are applied uniformly to both local and foreign investments. Investors who invest at least USD 10 million in an identified sector or product are entitled to negotiation with the government for additional incentives other than what they might already qualify for under the ZDA Act. But the 2012 national budget disallowed this practice as a way to make the investment climate more uniform and transparent. Investors who invest at least USD500,000 in a Multi-Facility Economic Zone (MFEZ) and /or in a sector or product provided for as a priority sector or product under the ZDA Act are entitled, in addition to being entitled to the general incentives, to:

--Zero percent tax rate on dividends for five years from the first year of declaration of dividends.

--Zero percent tax on profits for five years from the first year profits are made. For years six to eight, only 50 percent of profits are taxable, and for years nine and ten, only 75 percent of profits are taxable.

--Zero percent import duty on raw materials, capital goods and machinery, including trucks and specialized motor vehicles, for five years.

--Deferment of VAT on machinery and equipment, including trucks and specialized motor vehicles.

Priority sectors under the ZDA Act are:





Priority products are:



--Processed foods

--Beverages and stimulants

--Production and processing of textiles

--Manufactured engineering products

--Mini-hydro stations

--Education and skills training

--Production of fertilizers, cement, leather and timber products

General Incentives and Taxation: Foreign investors receive national treatment under Zambia’s tax system. Income from farming is taxed at a rate of ten percent, below the standard corporate tax rate of 35 percent. In addition, that portion of income determined by the Commissioner of Taxes to originate from the export of non-traditional products is taxed at a rate of ten percent (traditional exports include copper, cobalt, lead, zinc, gold, and silver).

Capital Allowances: Manufacturing, mining, and hotel structures qualify for a depreciation allowance of five percent per year, plus an initial allowance of ten percent of the cost in the year in which the building was first used. Equipment, machinery, and plants used exclusively for farming, manufacturing, and tourism qualify for a depreciation allowance of 50 percent. Capital expenditures on farm improvements qualify for a farm improvement allowance of 20 percent per year for the first five years after improvement. Capital expenditure allowance on the growing of coffee, tea, bananas, citrus fruits, or similar plants qualifies for a development allowance of ten percent per year through the first year of production. A farm work allowance of 100 percent applies to such farmland expenditures as stumping; clearing; preventing soil erosion; drilling boreholes, wells, and water conservation; and aerial or geographical surveys. The depreciation allowance for non-commercial vehicles is 20 percent (straight-line depreciation). Expenditure on other assets used in generating income qualifies for a depreciation allowance of 25 percent (straight-line depreciation). The 2012 National budget removed a five percent customs duty on helicopters and micro-lights for use in the tourism sector. The export duty applicable on copper and cobalt concentrates has been reduced from 15 to 10 percent and extended to cover all unprocessed or semi-processed minerals. This extension is intended to encourage local processing and value addition.

Although performance requirements are not imposed, authorities expect commitments made in applications for investment licenses to be fulfilled. No requirements currently exist for local content, equity, financing, employment, or technology transfers. Government does not impose ‘offset’ requirements or impose conditions on permission to invest in specific geographic area or local content, but investors are encouraged to employ local nationals.

Government requires that all international firms licensed operating a domestic cellular telephone network offer ten percent of shares on the Lusaka Stock Exchange, per commitments made by agreement prior to entering the market. Investors are required to disclose proprietary information to ZDA as part of the regulatory approval process.

Work Permit Requirements: Notwithstanding the provisions of the Immigration and Deportation Act of 1994, a foreign national who invests a minimum of USD 250 thousand or equivalent in convertible currency is entitled to a self-employment permit and employment permits for up to five expatriates. In practice, however, some foreign companies have had difficulty securing these permits, especially smaller-scale investors.

Import restrictions are in force on poultry products and genetically modified products for environmental, health and security reasons. Import licensing is required for most agricultural products, and Zambia does not currently apply trade sanctions. Food imports must satisfy the provisions of the Food and Drugs Act of September 1978, which requires packaging and labeling requirements to be in English. A consignment of assorted food products that were labeled in Chinese were destroyed at the Chirundu border post for not meeting the packaging and labeling requirements.

Right to Private Ownership and Establishment

Foreign and domestic private entities have a right to establish and own business enterprises and engage in all forms of remunerative activities, and no business ventures are reserved solely for the government. Although private entities may freely establish and dispose of interests in business enterprises, investment board approval is required to transfer an investment license for a given enterprise to a new owner. Private enterprises have occasionally complained that the playing field is not level when they compete with public enterprises for licenses or concessions.

Protection of Property Rights

The ZDA Act assures investors that property rights will be respected. Secured interests in property, both movable and real, are recognized and enforced.

The ZDA Act provides for legal protection and facilitates acquisition and disposition of all property rights such as land, buildings and mortgages. Currently, the ZDA is working with the Commissioner of Lands to develop a fast-tracking system for identifying land for investment in the priority sectors.

The legal framework for trademark protection in Zambia is adequate. There are fines for revealing business proprietary information; they are not large enough, however, to penalize disclosure adequately. Copyright protection is limited and does not cover computer applications. Enforcement of intellectual property rights is weak in Zambia, and courts have little experience with commercial litigation.

Zambia's patent laws conform to the requirements of the Paris Convention for the Protection of Industrial Property, to which Zambia is a signatory. It takes a minimum of four months to patent an item or process. Duplicative searches are not done, but patent awards may be appealed on grounds of infringement.

Zambia is a signatory to a number of international agreements on patents and intellectual property, including the World Intellectual Property Organization (WIPO), Paris Union, Bern Union, African Regional Industrial Property Organization (ARIPO), and the Universal Copyright Convention of UNESCO. National laws are generally adequate in protecting intellectual property rights, and recent enforcement has been effective against pirated musical and video recordings, cosmetics and software. Small-scale trademark infringement occurs for some packaged goods through copied or deceptive packaging.

Transparency of the Regulatory System

The government has made strides toward introducing transparent policies to foster competition, although complaints arise from time to time. Questions have arisen in recent years regarding the process of awarding Game Management Areas by the Zambia Wildlife Authority, the enforceability of existing mine development agreements, which gave mine owners the right to compensation if government failed to comply with agreed tax stability guarantees, and the fairness of competition between state-owned enterprises and private firms. In the agricultural sector, Zambian government interventions, through the purchase of maize (corn) at subsidized prices and the distribution of subsidized fertilizer, undercut the private sector’s capacity to enter these markets. The unpredictability of import and export bans on commodities, especially maize, is a deterrent to private sector participation in commodity markets.

Labor laws provide for extremely generous severance pay, leave, and other benefits to workers, which can impede investment. Such rules do not apply to personnel hired on a short-term basis. As such, the vast majority of Zambian employees are hired on an informal or short-term basis. The GRZ is in the process of reviewing the Minimum Wages and Conditions of Employment Act, Cap 276, of the Laws of Zambia.

Although the ZDA seeks to serve as a "one-stop shop" for investors, in practice red tape associated with licenses and permits presents problems for potential investors. In some cases, dozens of licenses are required to establish and run a business. The GRZ is working to streamline numerous licensing requirements and administrative procedures and this is reflected in the 2012 World Bank Doing Business Report where Zambia is ranked 84th out of 183 countries. This is a drop from the ranking of 76 out of 183 countries in 2011.

Proposed laws are usually not published in draft form for public comment. Opportunities for comment on proposed laws and regulations exist through trade associations, such as the Zambia Chamber of Commerce and Industry (ZACCI), Zambia Association of Manufacturers (ZAM), Zambia Chamber of Mines and Zambia Business Forum.

Although the underpinnings of an efficient system to handle court disputes exist, Zambian courts are relatively inexperienced in the area of commercial litigation. This, coupled with the large number of pending commercial cases, keeps the regulatory system from being prompt and transparent. Some measures to promote resolution of disputes by mediation have been implemented in an attempt to clear the case backlog. The courts support alternative dispute resolution, including a mechanism for binding arbitration. In 2004, the High Court established a commercial division to adjudicate high-value claims. This fee-based system has accelerated resolution of such cases.

Efficient Capital Markets and Portfolio Investment

Government policies generally facilitate the free flow of financial resources to support the entry of resources in the product and factor market. Banking supervision and regulation by the Bank of Zambia (BoZ), the central bank, has improved over the past few years. Improvements include revoking licenses of some insolvent banks, denying bailouts, limiting deposit protection, strengthening loan recovery efforts, and upgrading the training and incentives of bank supervisors. In 2010, the BoZ instituted overnight lending facilities, and in 2011 lowered capital requirements to inject further liquidity into the market.

Although some improvements have been registered in recent years, credit to the private sector is expensive and readily available only for low-risk investments. One factor inhibiting lending is a culture of tolerating loan default, which many borrowers view as a minor transgression. In addition, high returns on government securities have historically encouraged commercial banks to invest heavily in government debt, to the exclusion of financing productive private sector investments. Banking officials acknowledge that they need to upgrade the risk assessment and credit management skills within their institutions in order to better serve borrowers. At the same time, they argue that widespread financial illiteracy limits borrowers’ ability to access credit. Banks provide credit denominated in foreign currency only for investments aimed at producing goods for export. Banks provide services on a fee-based model, and banking charges are generally high. Home mortgages are available from several leading Zambian banks, although interest rates are still very high. Currently 19 banks operate in Zambia, including Citibank. Zambia’s largest banks are Zambia National Commercial Bank (Zanaco), Barclays Bank Zambia Limited, Standard Chartered Bank Limited and Stanbic Zambia Limited.

The 17-year old Lusaka Stock Exchange (LuSE) is structured to meet international recommendations for clearing and settlement system design and operations. The LuSE has offered trading in equity securities since its inception and, in March 1998, the LuSE became the official market for selling Zambian Government bonds. Investors intending to trade in a listed security or government bond are now mandated to trade via the LuSE. The market is regulated by the Securities Act of 1993 and enforced by the Securities and Exchange Commission of Zambia. The secondary trading of financial instruments in the market is very low or non-existent in some areas. At the end of 011, 22 companies were listed on the LuSE.

There are no restrictions on foreign participation in the LuSE, and foreigners may invest in stocks on the same terms as Zambians.

Private firms are open to foreign investment through mergers and acquisitions. The Competition Consumer Protection Commission (CCPC) reviewed and handled 23 big mergers and acquisitions in 2011, including Bharti Airtel’s purchase of Zain/Celtel Zambia, the purchase through privatization of Zamtel by LAP Green, the acquisition of Chevron’s assets in Zambia by Engen Petroleum, Wal-Mart Stores’ takeover of Game Stores through the acquisition of Massmart Holdings Limited of South Africa, Barrick Gold Corp takeover of Equinox Lumwana Copper Mines, the purchase of BP shares in Southern Africa, including BP Zambia by Puma Energy, and the Jinchuan Group Limited takeover of Metorex Chibuluma Copper Mine.

Competition from State-Owned Enterprises (SOEs)

There are few state-owned enterprises (SOEs) remaining in Zambia, and all have serious operational and management challenges. ZESCO Ltd is responsible for generation, transmission, and distribution of electricity in Zambia. Two private entities are contracted to supply electricity to some mines. Copperbelt Energy Corporation supplies electricity to mining companies on the Copperbelt, while North-Western Energy Company supplies power to Lumwana (Barrick Gold) Mine in Solwezi.

Private enterprises are allowed to compete with public enterprises under the same terms and conditions with respect to access to markets, credit and other business operations, such as licenses and supplies. Zambia has a pipeline of privately developed hydro-power projects. To name but a few: a USD 650-million project with Lunzua Power Authority for the construction of a 93-MW power plant at Kabweluma; a 151-MW power plant at Kundabwika; a 40-MW power project to be undertaken by Copperbelt Energy Corporation, with partners; and the USD 250-million Itezhi Tezhi Hydro power project to produce 120 MW by ZESCO and Tata Africa Corporation.

The SOEs are governed by Boards of Directors that are appointed by Government, with consultations and participation of the private sector. The chief executive of the SOE reports to the Board Chairperson. In the event that the SOE declares dividends, these are paid to the Ministry of Finance and National Planning. The Board Chairperson is informally obligated to consult with government officials before making decisions. Zambia does not have a Sovereign Wealth Fund.

Zambian SOEs are audited by the Auditor General’s Office, as required by law and using international reporting standards. The audited reports are submitted to the President for tabling in the National Assembly, in accordance with the provisions of Article 121 of the Constitution of Zambia and the Public Audit Act, Cap 378, of the Laws of Zambia. The audits are carried out annually, but delays in finalizing and publishing results are common.

Corporate Social Responsibility

The concept of corporate social responsibility (CRS) has recently gained traction in Zambia. General awareness of corporate social responsibility exists among both producers and consumers. Some local and foreign enterprises tend to follow generally accepted CSR principles, such as the OECD Guidelines for multinational enterprises, while other foreign firms ignore complex issues, such as labor rights, environmental protection, bribery, corruption and human rights. The firms that pursue CSR are viewed favorably by the government and the communities in which they operate.

Political Violence

Zambia does not have a history of significant political violence. Infrequent student protests sometimes turn violent, but they are generally short-lived and confined to small areas in and around universities. In December 2010, a Lusaka High Court nullified a parliamentary by-election held in Mufumbwe, Northwestern Province, in April 2010, citing extreme violence, intimidation and destruction of property. Zambia held relatively peaceful presidential, parliamentary and local government elections on September 20, 2011, which ushered in a change of governing party from the Movement for Multiparty Democracy (MMD) to the Patriotic Front (PF), led by now-President Michael Sata.


Zambia’s anti-corruption activities are governed by the Anti-Corruption Act of 2010 and the National Anti-Corruption Policy of 2009, which stipulate penalties for different offenses. While legislation and stated policies on anti-corruption are adequate, implementation sometimes falls short. Zambia lacks adequate laws on whistleblower protection, asset disclosure, evidence, and freedom of information.

Zambia signed and ratified the United Nations Convention Against Corruption in December 2007. Zambia is also a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. Other regional anti-corruption initiatives are the Southern Africa Development Community (SADC) Protocol Against Corruption, ratified on July 8, 2003, and the African Union (AU) Convention on Preventing and Combating Corruption, ratified on March 30, 2007.

U.S. firms and the Zambian government have identified corruption as an obstacle to foreign direct investment. Corruption is most pervasive in government procurement and dispute settlement. Giving or accepting a bribe by a private, public or foreign official is a criminal act, and a person convicted of doing so is liable to a fine or a prison term not exceeding five years.

A bribe by a local company or individual to a foreign official is a criminal act and punishable under the laws of Zambia. A local company cannot deduct a bribe to a foreign official from taxes.

The Anti-Corruption Commission (ACC) is the agency mandated to spearhead the fight against corruption in Zambia. The Anti-Money Laundering Unit of the Drug Enforcement Commission (DEC) also assists with investigation of allegations of misconduct. An independent Financial Intelligence Unit (FIU) was formed in 2010, but has not yet developed the capacity to take the lead in investigating financial crimes. Zambia’s anti-corruption organs generally do not discriminate between local and foreign investors.

Transparency International has an active Zambian chapter. The GRZ encourages companies to establish internal codes of conduct that, among other things, prohibit bribery of public officials. The Integrity Committees (ICs) Initiative is one of the strategies of the National Anti-Corruption Policy (NACP), which is aimed at institutionalizing the prevention of corruption. The NACP was approved by the previous government in March 2009, and its implementation is spearheaded by the Anti-Corruption Commission. Eight institutions were targeted, including the Zambia Revenue Authority, Immigration Department and Ministry of Lands. Most companies have effective internal controls, ethics and compliance programs to detect and prevent bribery. The new PF government has not yet signaled whether it will follow the NACP or develop a new policy to fight corruption. During the election campaign and since being sworn in on September 23, 2011, however, President Sata has said that anti-corruption will be a central pillar of his presidency.

Bilateral Investment Agreements

Zambia has signed bilateral reciprocal promotional and protection of investment protocols with most of the Common Market for Eastern and Southern Africa (COMESA) and the SADC member states. In November 2001, COMESA signed a Trade and Investment Framework Agreement with the United States. On October 2, 2000, Zambia became a beneficiary of the African Growth and Opportunity Act (AGOA). Zambia initialed market access through the Eastern and Southern Africa (ESA) interim Economic Partnership Agreement (IEPA) with the European Union on September 30, 2008. In completing these negotiations, the provisions of trade in goods chapter and related annexes of the ESA IEPA now apply to Zambia. Zambia has signed protective agreements with Chinese, Nigerian, Libyan and Indian investors.

Zambia does not have a bilateral investment treaty or a bilateral taxation treaty with the United States.

OPIC and Other Investment Insurance Programs

An OPIC/Zambia agreement was signed in June 1999. Zambia is also a signatory to the Multilateral Investment Guarantee Agency (MIGA), which guarantees foreign investment protection in cases of war, strife, disasters, other disturbances, or expropriation. In June 2001, the World Bank extended credit in the amount of USD five million to start up the African Trade Insurance Agency (ATI). This institution, which is open to all African states that are members of the AU, provides exporters with insurance against receivables on export trade deals and political risk insurance for trade transactions. In the event that OPIC should pay an inconvertible claim, the local currency accepted by OPIC would be made available, pursuant to the bilateral agreement providing for the OPIC program, to the Mission/ATI on a priority basis for USG expenses.

The Embassy uses approximately USD 9.7 million in Zambian Kwacha per year. Kwacha were purchased at the average market exchange rate of K4, 850 to the U.S. dollar in 2011. Zambia’s foreign exchange rates track closely with international copper prices. As such, when copper prices rise, the Kwacha generally appreciates in value.


Although an abundance of unskilled labor exists in Zambia, investors complain that the supply of skilled and semi-skilled labor is inadequate. The government adheres closely to International Labor Organization (ILO) conventions. Labor-management relations vary by sector. Strikes are not uncommon in the public sector and often are related to the government’s failure to pay salaries or allowances on time. The minimum monthly entitlement for any permanent employee, including general workers, is approximately Kwacha 491,000 (USD 98). The new government has signaled that it will review labor policy and labor laws, with the possibility of raising minimum wage levels.

Foreign Trade Zones/Free Ports

An investor may apply to be appointed and licensed by the Commissioner General to establish and operate a bonded factory under Section 65 of the Customs and Excise Act. In early 2007, the GRZ announced the creation of multi-facility economic zones (MFEZ) in which investors enjoy waivers on customs duty on imported equipment, excise duty and value added tax, among other concessions.

On October 31, 2000, the COMESA Free Trade Area (FTA) was launched. COMESA established a customs union in June 2009, during the 13th Summit of the COMESA Heads of State and Government. The top five intra-COMESA exports from Zambia include tobacco, raw sugarcane, wire, refined copper and cement.

The SADC (Southern Africa Development Community) Trade Protocol Member States, a regional grouping of 13 African states, came into force in 2008. The protocol promotes regional integration through trade development and develops natural and human resources for the mutual benefit of their people. Trade among SADC member states is conducted on reciprocal preferential terms. Rules of Origin define the conditions for products to qualify for preferential trade in the SADC region. Products have to be ‘wholly produced’ or ‘sufficiently processed’ in the SADC region to be considered compliant with Rules of Origin. The Rules of Origin for SADC are product-specific and not generic, as are the ones for COMESA.

Foreign Direct Investment Statistics

The ZDA compiles data on investment commitments from investors who obtain investment licenses at the ZDA and from other investment reports. Investors in mining projects do not invest through the ZDA, but instead work with the Ministry of Mines and Mineral Development. The ZDA data are therefore incomplete and should not be considered a complete measure of investment. They are, however, the only FDI data available in Zambia.

Below is a summary of investment pledges in U.S. Dollars for 2010 and 2011
















Financial Institutions















Real Estate















Source: Zambia Development Agency, Research, Planning and Policy Division, 2011

Summary of Investment pledges from the United States for 2010 and 2011

Pledged investments in US $













Real Estate













Source: Zambia Development Agency, Research, Planning and Policy Division, 2011

National Level Actual FDI Inflows by Source Country – 2010 to 2011



US$ millions


US$ millions




British Virgin Islands





















South Africa












United Arab Emirates



United States



United Kingdom






Source: Private Capital Flows and Investor Perceptions Survey, 2010 and 2011 Reports


The outflows are represented by a negative (-) sign.

The FDI statistics for 2011 are for the first and second quarter of the year only.

Estimated current FDI stock as a percentage of GDP, according to ZDA data: 23 percent.