The Investment Policy Review of Zambia is the first review carried out in sub-Saharan Africa on the basis of the OECD Policy Framework for Investment. Undertaken in the context of the Unlocking Investment Potential in Southern Africa programme with the support of the government of Finland and the NEPAD-OECD Africa Investment Initiative, it reflects the growing co-operation between the OECD and its African partners.

Zambia is one of the dynamic growth poles of Southern Africa, thanks to important progress in recent years in strengthening its policy framework for investment. The economy is landlocked but is strategically land-linked to eight neighbors in the middle of Southern Africa and has significant development potential and good economic prospects.

Zambia illustrates the rise of Southern Africa as new investment frontier.

Thanks to important progress in recent years in strengthening the policy framework for investment, Zambia is one of the dynamic growth poles of Southern Africa. Zambia’s trade and investment policies have been anchored in economic diversification and privatisation of state-owned enterprises. This chapter describes the political and economic changes in Zambia since Independence and presents measures that would further improve Zambia’s investment framework, for both domestic and foreign investment.

This chapter charts Zambia’s progress in improving its investment climate. Commitment by the government of Zambia to strengthening the investment policy framework has resulted in the enactment of new laws, regulations and policies over the past decades. The launching of the Private Sector Development Reform Programme in 2004 and its related measures has been a key milestone in that regard. Although notable improvements in the investment climate have been recorded, Zambia nevertheless still faces some regulatory challenges, including the lack of an investment policy. This chapter also provides recommendations for Zambia to fully capitalise from investment in its resource-rich economy.

Over the past decade Zambia has taken important steps in building a more efficient framework for setting up businesses, hence addressing some of the structural and operational bottlenecks inherited from the centrally planned economy prior to 1990. This chapter examines various measures adopted by the government to reduce administrative burdens on investors and to increase the role of the Zambia Development Agency in promoting investment. This chapter also illustrates that while reforms such as the Business Licensing Reform Programme are showing impact, Zambia could take better advantage of various investment promotion options available so as to become a more competitive investment destination.

This chapter investigates Zambia’s reforms in terms of two policy frameworks that strongly influence the investment climate: trade policy and competition policy. In terms of trade policy, the chapter explores how Zambia has been enhancing trade policy consistency, and aiming to diversify its trading structure away from mining. A major challenge nonetheless remains the competitiveness of domestic companies, especially SMEs, which affects their ability to benefit from increasing trading opportunities achieved through sound trade policy. In terms of competition policy, the chapter analyses how the recent Competition and Consumer Protection Act aims to enhance enforcement powers of the Competition Commission and further protect consumer welfare, and what implementation challenges remain in this respect.

Zambia has undertaken significant efforts in reducing the tax burden for investors. This chapter investigates to what extent the Zambian tax burden is linked to broader development objectives, how tax planning benefits from international collaboration, and what influence tax incentives have on tax-planning activities. This analysis suggests that Zambia needs to do more to increase its domestic resource mobilization through simplifying and unifying its tax structures, which would notably include taking a fresh look at its fiscal incentives schemes.

Although there is no official policy framework for corporate governance in place in Zambia, some corporate governance standards have been enshrined in critical legislation. This chapter notably investigates the strengths and limitations of the Companies Act and of its implementing agency the Patents and Company Registration Agency (PACRA). Regulation of state-owned companies is also covered.

Zambia’s economy has shown relatively strong performance since the 1990s, and the recently launched private sector development reforms are expected to help maintain a positive momentum. The government limits its direct involvement in business to strategic investments deemed critical for the delivery of public goals and services, and seeks to maintain high standards of consumer protection. Moreover it engages the private sector on policy and regulatory reforms. Yet, clearly formulated and well-implemented RBC policies should be considered to help raise the contribution to society of strongly performing sectors of the economy. This chapter highlights this progress, and concludes that the main remaining challenges are those of domesticating international practices and strengthening regulatory capacities.

The government of Zambia has integrated infrastructure investment into broader economic growth objectives under the five-year national development plan. This chapter maps progress in developing and attracting investment in all key infrastructure sectors: telecommunications, electricity, transport, and water and sanitation. It indicates that Zambia has a relatively good network of primary and secondary roads, although it is significantly weaker in rural areas. The deteriorating rail networks are also a crucial issue because as a land-locked mineral-exporting country, Zambia has to rely on regional transport infrastructure. While private investment in telecommunications and the energy sector is relatively recent, it carries strong potential. This chapter also analyses the regulatory and institutional framework for infrastructure development, including how the government evaluates the country’s most pressing infrastructure needs.

This chapter examines other policy areas shaping Zambia’s investment climate, including financial sector development and human resource development strategies, as well as public governance. Analysis of the financial services sector mostly focuses on evaluating areas of oversight and regulation, as well as on protection of the rights of borrowers and creditors. Meanwhile in the human resource development realm, this chapter highlights a number of achievements in primary education, which result from Zambia having placed high priority on education and skills development. However producing adequate skills to meet industry demands remains a weakness. Finally as pertains to public governance, the chapter charts the Public Service Reform Programme (PSRP) and the comprehensive re-structuring process aimed at realigning the role of government and the public service that followed the introduction of multi-party democracy from 1990. Anti-corruption efforts are also evaluated, suggesting that more effective measures and stricter enforcement remain necessary to prevent and combat corruption.