Zambia Business in 2021
Before we start talking about Zambia Business, I would always advise knowing the country basics, before we deep dive into business in Zambia.
Start a Business in Zambia
Zambia is one of the landlocked countries in the Southern part of Africa, with a sparsely populated landmass. It shares its borders with eight neighboring countries: Tanzania, Malawi, Namibia, Botswana, Congo, Angola, Mozambique, and Zimbabwe.
These countries serve as an expanded market for Zambia’s goods and services. As one of the world’s youngest countries regarding its young population, Zambia is experiencing a significant demographic shift.
Most of its 18 million residents prefer settling in urban areas due to the ease of doing business under improved infrastructure. According to statistics, Zambia’s annual population growth stands at about 2.8 percent due to the high fertility rate. This results in the population doubling almost every 30 years.
What Part of Africa is Zambia?
Zambia is located on a high plateau in the south-central part of Africa, neighboring Tanzania and Congo to the north, Mozambique and Malawi to the east, Botswana Zimbabwe to the south, and Angola and Namibia to the west.
On the west part of the country, Zambia has a long land border that separates it from Angola. In contrast, the Zambezi River separates it from its southern neighbors. On the southwest side, Zambia is divided from Namibia using a thin projection that is better known as the Caprivi Strip.
Botswana, Namibia, and Zimbabwe also border Zambia but on the eastern side. Lake Kariba, which happens to be even human-made, acts as a water border between Zambia and Zimbabwe. As for the Democratic Republic of Congo, Zambia shares a long border at Lake Tanganyika, which flows through Lake Mweru and River Luapula. The Angolan border with Zambia is found on the west side of the Pedicle.
When looking at the map, you will notice Zambia has a distinctive butterfly shape due to the wedge of Congo’s territory cutting deep into the country. Zambia has maintained peace and stability over the last decade, avoiding war and upheaval that have profoundly affected most African countries during the post-colonial period.
Due to this factor, Zambia has earned itself a respectable reputation for peace and political stability. Lusaka is the capital city of Zambia, situated in the south-central part of the country — 450 kilometers from Livingston town. According to the last census conducted in the country, Lusaka has an estimated 2 million people.
The Southern African country sits mostly on a plateau with an average height of about 1300 meters above sea level. Mafinga Hills is one of the country’s highest points, located close to the east’s Malawi border.
Key Facts About Zambia
- Lusaka is the capital city of Zambia
- The country has a population of about 18 million people
- Its landmass measures about 752,600 square kilometers
- Christianity, Islam, and Hindu are the three predominant religions in the country
- The average life expectancy is 41 years for both men and women
- The country’s literacy levels stand at about 81 percent
- It has a GDP per Capita of 800 US dollars
- English is the official language in Zambia but has over 73 dialects spoken in the country
- Kwacha (ZMK) is the official Zambian currency, which is divided into 100 Ngwees
- Coins are seldom used in the country due to their worthless nature
- Zambia uses 220 volts, 50Hz electrical current. The country also uses 3-pin plugs in its electricity distribution
- +260 is the international dialing code for the Southern African country
- GMT +2
How Big is Zambia
Zambia has a total landmass of about 752,600 square kilometers. Although it is a landlocked country in southern Africa, Zambia has two major rivers that drain the country. The Congo basin covers 25 percent of the land, while the basin of the Zambezi covers 75 percent of Zambia.
The Zambezi basin is fed by several major rivers such as River Zambezi, Kabompo, Luangwa, Lungwebungu, and Kafue. It is River Cuando’s floodplain that forms Zambia’s southwestern border territory. On the other hand, Luangwa and Kafue’s meeting with the great Zambezi River is found at Zimbabwe’s border.
On Zambia’s southwest side, you will find River Zambezi plummeting over 100 meters over the spectacular Victoria Falls to flow into Lake Kariba. The Zambezi’s valley is deep and wide compared to other perennial rivers.
Zambia enjoys a tropical climate throughout the year thanks to its high plateau position and several hills.
The People of Zambia
Although English is the official language in Zambia, most citizens communicate in Bantu dialects of the Niger-Congo language family. Most of these Bantu speaking people are descendants of blacksmiths and farmers who settled in the region over the past 2,000 years.
Despite the above-average literacy levels and modernization, most people are still observing their traditions and customs in the country. For instance, people who reside in the northern part of Zambia adhere to cultural practices highly influenced by the upper Congo basin.
The Zambian population also hosts some descendants of hunters and gatherers who migrated from the Kalahari Desert to Lukanga swamps, Bangweulu, and Kafue flats. At present, Zambia has more than 70 ethnic communities calling the southern African country their home.
Christianity is the predominant state religion. However, only a few people have left all aspects of traditional customs and belief systems. Missionaries were the first people who arrived in Zambia during the pre-colonial period. They tried to establish schools and churches in their quest to convert Africans into Christianity.
More than 75% of the Zambian population identify themselves as Protestants, while only 20% of the total population embrace the Roman Catholic Church. A significant number of the Asian community subscribes to Hinduism, while the rest practice Islam. Relatively, few Africans subscribe to Islam compared to Christianity.
Most Zambians prefer living in urban areas along the railway line due to the ease of doing business and traveling from one town to another.
In Zambia, rural to urban migration has been the predominant form of movement since colonial travel restrictions were banned. However, successive administrations have been working around the clock to reverse the country’s migration flow since life in urban areas is quickly being defined along class lines.
Relative to the country’s landmass, Zambia’s population is relatively small, with a lower growth rate than its sub-Saharan neighbors.
Most of Zambia citizens are young people, falling under the age bracket of below 15 years. Although the country’s birth rate is remarkably higher than the world average, Zambia’s life expectancy is below the global average.
As for its death rate, Zambia records one of the highest numbers in the world. This is primarily attributed to the high prevalence of HIV and AIDS in the southern African nation.
In 1964, Zambia got its first African president, Kaunda, who came into power after taking part in the independence struggle. To date, Zambia maintains a presidential representative democratic republic’s status. The executive president acts as the head of state and head of government. Zambia maintains the structure of 3 arms of government — Legislature, executive, and the judiciary.
Zambian Economy and Business Environment
As the second-largest producer of copper, Zambia’s economy largely depends on copper prices, which generates about 75 percent of the total export earnings. However, due to copper’s recent fluctuating price, Zambia’s growth has stalled, recording a below 5 percent growth rate.
Despite this setback, Zambia has a favorable business environment that promises to make good profits to anyone who ventures into the market. That said, what is the best way for foreign investors to set up a business in the southern African country? The best answer is to set up a Zambian limited liability Company, better known as an LLC.
Also, foreign investors can opt to set up a Zambian Public Limited Company or PLC if they wish to raise the country’s capital.
Requirements for Opening a Limited Liability Company (LLC)
- Must have at least two directors and two shareholders.
- One of the directors of the company must be either a citizen or a permanent resident in the southern African nation
- There is a minimum 1,000 US dollar share capital limit required when registering an LLC in Zambia
Requirements for Opening a Public Limited Company
- Similar to an LLC, a public company needs at least two directors and shareholders
- One director must be a Zambian citizen or permanent resident
- The minimum share for registration is 10,000 US dollars
A public company can invest in any sector of the Zambian economy, including banking and financial services. One of the advantages of opening a public limited company in Zambia is that it can be listed in the Zambian capital markets.
The benefit of being listed in the capital market is a 10 percent reduction of corporate tax for any newly incorporated public company and a 7 percent reduction for any company with local shareholders.
How to Register These Companies?
The registration can be done virtually or physically. The body mandated by the constitution to oversee companies’ incorporation is known as the Patent and Companies Registration Agency (PACRA). It has an online portal that avails all the forms required for registration.
- Business name search, name reservation, and clearance
- Business or company registration using the new business name
- Business name reservation and clearance at the Patent and Companies Registration Agency (PACRA)
- Company registration at PACRA offices
Suppose you decide to open either company in the southern African nation. In that case, you will be able to enjoy the following incentives:
- Up to 5 years of tax benefits
- The reduction of taxes over the next five years after fulfilling the requirements of the Zambia Development Agency
- For companies engaging in the mining and energy sector, you can extend the tax loss carryforward interval up to 10 years
- Mining companies are income tax exempted
- Companies engaging in agriculture and agro-processing enjoy a 10 percent reduction in corporate tax
Zambia is a very diverse country, starting from its own people from different backgrounds and speaking different languages. And being one of the rapidly developing countries, the country presents itself as an opportunity for locals and foreign investors. The good thing is that overall, Zambia is a peaceful and politically stable country, which means fewer distractions in whatever you do.