How to start a business in Zambia

We are going to discuss the dynamics of how to start a business in Zambia.

Has it always been your dream to start up a business in the South African country of Zambia? Have you ever dreamt of being the captain of your destiny or your boss?

It seems starting a business venture in Zambia is not a walk in the park.

Although I said it might not be easy, it is still very much possible to start up a business. Thanks to new regulations and policies, you do not have to own millions of dollars to have a successful business venture.

I have prepared some guidelines to help you as you plan to start a new business. My advice after I started my venture is registering a company. It might seem like a big deal, but I can assure you it isn’t.

After reviewing the company laws of how to start a business in Zambia and also after a personal experience and touch in the business affairs in the country, I was able to come up with several advantages of starting a business in Zambia.

As an entrepreneur, I realized that I was liable for all of my business aspects, including losses and debts. After research, I realized they have laws that separate my business and personal assets. Tax liability. I realized that a company is entitled to a deduction of tax for education, advertising e.t.c. It is easy to raise capital.

For a foreign investor, the easiest way on how to start a business in Zambia is by starting a limited liability company. There is also another way around it by starting a public limited company. This alternative is most suitable for those entrepreneurs who are willing to raise capital in the country.

Alternatively, in the case of an existing entity, and you are looking to expand your business by starting a representative office in Zambia, you can also register a branch.

The Limited Liability Companies (LLC)

Locally these companies are also referred to as private companies limited by shares. They also happen to be the most commonly used entities by entrepreneurs who are starting SMEs in Zambia.

An LLC must have two shareholders and at least two directors, of which one of the directors must be a permanent resident in Zambia. There is also a minimum share capital limit when incorporating limited liability companies, which is approximately US$ 1,000 or its equivalent ZMW 15,000.

Public Limited Companies

Similar to the limited liability company, a public company needs at least two shareholders and two directors.

Also, like for the private company limited by shares, one of the directors must be a resident in Zambia. The minimum share capital needed to incorporate the public company is a bit higher when compared to that of the limited liability company.

For a public company, the minimum share for incorporation is US$ 10,000. For the public company, they can invest in any type of venture in Zambia, including financial and banking services. This type of company (the public limited company) is most convenient for investors considering to list the company in the country’s capital markets. The advantage of listing the entity in the Zambian capital markets is, a 10% reduced corporate tax for any newly registered public company and a 7% for any company with local shareholders.

These reductions of tax are enjoyed for a whole year for companies listed on the Lusaka Stock Exchange.

The Branch Office

Any branch from a foreign business is regarded in Zambia as a foreign entity. The nature of all branch operations are to be determined by the mother company as 100% branch ownership by foreign countries is allowed by the Zambian Law. It is a requirement for all branches to have a resident manager or director to run the affairs and activities of the company in the country.

All foreign country branches in Zambia are required to submit annual audited tax returns and financial records and are also liable to corporate tax as they are all subject to the provisions of the Companies Act Chapter 388.

Representative Office

One of the downsides to these entities is that they are not allowed to engage in any income-generating ventures or any direct sales. However, just like other ventures, they can be 100% foreign-owned.

I know the questions in your minds now is, what use are these representative offices for?

Well, these offices are permitted to market and promote the parent company’s activities as well as to research the mother companies. Similar to the other companies, the representative office must appoint a legal office representative on matters concerning the government. The said individual must reside in the country before making inquiries on how to start a business in Zambia.

Registration of these companies

Registration can be done either physically or online.

All forms that you will need can be find on PACRA Online User Registration Forms page

PACRA (Patent and Companies Registration Agency) is mandated by the government of Zambia as the authority responsible for registering companies.

Online Application

 #1 Name search, reservation, and clearance.

To start registration, you first have to access the PACRA online portal. To log in, you must register as an online user.

A maximum of three names for the company/business is proposed, which you should submit for you to be cleared. These names are considered for listing purposes. In some cases, the first choice is disregarded, and the latter is considered.

A name might be disregarded because;

  1.  The name might be difficult to pronounce or might be too long.
  2. A name that might imply that the applicant derives fun from patronizing the office of the president or the vice-president.
  3. A similar name to a renowned name or a confusingly similar name to an already existing entity.
  4. Names that use the country’s name as a prefix. They are termed to be misleading and deceptive.
  5. Names that are undesirable or offensive. Names that are against public policy or that are in the form of insults are subject to be ignored or declined. 

The paying instructions are given, and only the provided instructions are to be followed.

Print and receive acceptance.

Once your entity’s name is accepted, you are required to apply for a reservation of the entity’s name.

#2 Company / Business registration using the new entity’s name.

To complete this registration, you will need to go to the One-Stop-Shop for business registration. It is located at Kwacha House, Lusaka Cairo road. To register a Company / Business, it only takes 24 hours.

What am I applying for?

  • ZRA (tax registration)
  • NAPSA (where you are registering as an employer)
  • There is an optional registration for small and micro businesses (MSE / ZDA)

In-Person application

#1 Name reservation and clearance at PACRA.

To begin the application process, you should approach/visit the PACRA offices with a written application for approval of a name on a name clearance form and address it PACRA.

You can access and download these forms from their website at www.pacra.org.zm.

The fantastic aspect is that this process (name clearance) can be processed on their page or from any of their offices around you. Similar to online registration, a maximum of three names for the company/business is proposed of which you should submit for you to be cleared.

These names are considered for listing purposes. In some cases, the first choice is disregarded, and the latter is considered. A name might be disregarded because of; same as above.

  • The name might be difficult to pronounce or might be too long.
  • A name that might imply that the applicant derives fun from patronizing the office of the president or the president.
  • A similar name to a renowned name or a confusingly similar name to an already existing entity.
  • Names that use the country’s name as a prefix. They are termed to be misleading and deceptive.
  • Names that are undesirable or offensive. Names that are against public policy or that are in the form of insults are subject to be ignored or declined. 

After a name is accepted, a 30 day reservation period begins. Reservation lasts for 30 days, after which the name clearance expires.

Some charges that are charged for the processes include;

  1. Local Companies or Business Name = K83
  2. Foreign Company = K166

#2 Company / Business registration at PACRA offices using the new entity’s name.

 1. Registering a business

Once again, just like the online registration, to complete the business registration, you will need to the One-Stop-Shop for business registration. It is located at Kwacha House, Lusaka’s Cairo road.

To register a Company / Business, it only takes 24 hours. What am I applying for?

  • ZRA (tax registration)
  • NAPSA (where you are registering as an employer)
  • There is an optional registration for small and micro businesses (MSE / ZDA)

 2. Registering a company

For this particular process on how to start a business in Zambia, one (applicant) has to visit the PACRA offices. You are issued with a form of which you have to complete the.

I have compiled the form you need to complete the registration for you to review.

It is important to note that the forms might be wedged with articles. (it takes 24 hours to complete the process).

  • Application for incorporation for LLC or Private Limited by shares. This form is referred to as Companies Form 2.
  • The Consent to act as Secretary / Director form, also known as Companies Form 5.
  • The Declaration of Compliance for also known as Companies Form 11. It must be duly noted that this particular form must be commissioned.
  • The Standard Article Form.

Before registering a company, some prior conditions need to be met. Which include;

  • K83 , which is Name Clearance
  • There should be at the very least two and, if possible more directors
  • The Articles of Associations should be available in 4 copies
  • K 15,000

Some mandatory fees for the registration should be expected. These fees include K332 plus 2.5% of the capital, which acts as the registration fee. It is important to note that the registration fees increase with the increase of the nominal capital.

The One Stop Shop Registration Form should be filled after 24 hours upon the reception of the signed Certificate of Registration from the PACRA office. This is done explicitly for;

  • ZRA (tax registration)
  • NAPSA (where you are registering as an employer)
  • There is an optional registration for small and micro businesses (MSE / ZDA)

Once all is completed, the application is to be submitted at the NAPSA or ZRA offices, after which the registration confirmation is to be immediately collected.

3. Private Limited Company registration.

Similarly, also for the registration of a Private Limited Company, the applicant has to visit the PACRA offices. Once at the PACRA offices, one is required to submit to the supervisor filled application forms and your payment receipts for approval.

  • The Application for incorporation of a Private Limited by Guarantee Form. This form is referred to as Companies Form 3.
  • The Consent to act as Secretary / Director form, also known as Companies Form 5.
  • The Declaration of Compliance for also known as Companies Form 11. It must be duly noted that this particular form must be commissioned.
  • The Standard Article for Limited by Guarantee Form.

Similarly, before registration, some prior conditions need to be met. These conditions include;

  • K83, which is Name Clearance.
  • There should be at the very least two and, if possible more directors.
  • A Company Secretary is also needed.
  • The Articles of Associations should be available in 4 copies.
  • K 15,000, which is the nominal capital amount (minimum).
  • A filling fee is to be paid, K750. It takes approximately 24 hours for the process to be completed.

The One Stop Shop Registration Form should be filled after 24 hours upon the reception of the signed Certificate of Registration from the PACRA office. This is done explicitly for;

  • ZRA (tax registration)
  • NAPSA (where you are registering as an employer)
  • There is an optional registration for small and micro businesses (MSE / ZDA).

The application is to be submitted at the NAPSA and ZRA offices, after which the registration confirmation is immediately collected.

Eligibility

For one to be eligible to start a business, one has to be 18 years and above. Another condition is that one is to be of sound mind. In the case of one registering a company, one is eligible also in the case of an undischarged bankrupt under Zambian Law.

Ideas to consider on how to start a business in Zambia

Thanks to the (PRSP) Poverty Reduction Strategy Paper / (TNDP) Transitional National Development Plan that was successfully implemented from 2002 – 2005, the economy of Zambia has taken off. After decades of troubling economic status, consequently, these have led to the creation of many investment opportunities, including the key sectors in the economy.

After intensive research and mind-blowing experience, I have realized some worthy ideas of which have compiled and should be considered.

Leasing of Agricultural Equipment

With the fast-growing agricultural development in Zambia, which includes embracing modern agriculture, it is correct to say that agricultural equipment rental services are the most promising venture worthy of investing.

With that said, equipment like tractors and their accessories are what local farmers need.

Construction

With Zambia racing to reach its other Africa counterparts, the construction sectors have hit high picks. With the rapid growth in infrastructure development, the country has experienced a shortage of construction equipment and machinery, resulting in high costs of construction.

These in itself has created an opportunity for prospective investors in the line of machinery and equipment leasing.

Machinery for hire should include:

  • concrete saws
  • concrete vibratos
  • concrete trucks
  • loader
  • excavators
  • bulldozers
  • trucks
  • compactors
  • asphalt mixers e.t.c.

Transport

1. Public transportation

With the rapid development in infrastructure, this is another promising venture. With the construction of roads networking urban and rural areas or other interior areas that were not accessible before, transportation has become a goldmine for investors who are wondering how to start a business in Zambia.

It not necessary to buy brand new buses or minibusses; one can purchase used buses and minibusses that are in good condition for way lower prices and live to enjoy insane profits.

2. Trucking and Freight

This is a worthy business idea in almost any developing country. Investing in trucks could make you tones of money when invested in a developing country with so much potential, such as Zambia.

The food processing industry

It is advisable to seize such an opportunity and make the best out of it.

Soya Beans Processing

With soya now being tilled in Zambia, it is quickly gaining its grounds as a top agricultural product in the country. Hence the urgency of more processing companies.

With the hasty growth of Soya cultivation in the country and the ever-growing market and demand of its end products, mainly tofu and milk, the future of agriculture in Zambia may lie there.

It should be a venture to consider.

2. Maize Flour Milling

With the main staple food in Zambia being maize, there is a need for urgency in establishing more maize flour processing entities.

With very promising returns and ready markets, this can be turned into a money-making venture.

Should you require further information.


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My name is Steven. After 11 years of doing business, I established 13 companies in 8 countries on 4 continents. Now I’m about to open another one in the heart of Africa. About me

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