.LUNGU

By CHARLES SIMENGWA

IT is evident from the steps Government is taking that it is eager to empower local businesses, particularly the Small and Medium Enterprises (SMEs).
Zambia’s Foreign Direct Investment (FDI) is growing at a steady clip, made possible by the attractive investment climate and political stability in the country.
The rich range of investments in mining, agriculture, and construction has now included retail trade, primarily foreign chain stores which have extended their footprints to some parts of the country.
But as FDI soars, there is growing recognition of the need for measures that would ensure that local entrepreneurs were not squeezed out of business.
This, essentially, is the hegemonic control President Edgar Lungu is seeking to forestall by directing all supermarkets operating in the country to stock Zambian-grown produce and other local products on their shelves.
He gave the directive when he commissioned the US$45.5 million Mukuba Mall in Kitwe recently.
From where the President stands, there is no reason why local produce such as tomatoes and potatoes should not be given sufficient shelf space in supermarkets, which are benefitting massively from Government’s investment incentives.
It is a matter of concern that Zambian businesses have pitiable presence in high-end retail spaces and shopping malls.
Some reasons for the tilted scale have been identified.
As Mr Lungu said, this could be a result of rental pricing structures that may be working against local tenancy.
However, to even create artificial barriers for local fruit sellers and related businesses is akin to escalating the matter to discrimination, and this has expectedly left many SMEs feeling uneasy.
None of this means that foreign investors are being undermined. On the contrary, the basic rationale for campaigns for more FDI could easily be lost if this imbalance was not addressed, without making anyone edgy.
The best thing any Government could do is to raise the productivity and employability of its people by getting the best out of its investment policies.
This is the position Bank of Zambia governor Denny Kalyalya, who has set his sights on two key measures to re-steady the country’s economy, shares.
Dr Kalyalya is eager to ensure that Zambia’s economy not only grows faster, but that it grows in a more equitable and sustainable way.
He notes that over the past three years, the economy has grown by an annual average of around 6.5 per cent, using the rebased Gross Domestic Product (GDP).
Preliminary estimates are that in 2014, real GDP growth was six per cent and for 2015, a growth target of at least seven per cent was announced by Finance Minister, Alexander Chikwanda, in his 2015 Budget address.
The growth has been broad-based and driven by sectors that include agriculture, construction, energy, transport and communications.
Other prime sectors are wholesale and retail trade, the financial sector, and mining.
Mining has been a significant source of FDI and has played an important role in the development of other sectors, even though its contribution to GDP declined in 2014.
“However, it is clear to all of us that the growth we have witnessed has not been shared by all.
“Small-scale entrepreneurs, for instance, have had particular challenges in growing and creating employment, with issues of infrastructure such as power and roads as well as access to finance being key constraints,” Dr Kalyalya said.
This was during his first Press briefing on March 20, 2015, following his appointment as head of the central bank on February 13, this year.
There is relief, though, that SMEs may not be stuck in the mud for long, as Government is making wide-ranging decisions to both protect and support the growth of local investment in all sectors of the economy for both local and foreign entrepreneurs.
Such a vision is also in sync with the 2015 Zambia International Trade Fair theme, ‘Prosperity through business reforms and linkages’.
There could be no better way to lift local businesses than to develop long-term linkages for them through solid business reforms.
The national discourse should steer away from the tired mantra of empowering local entrepreneurs; the reforms should be done in a practical manner.
Mr Lungu said Government is doing everything possible to provide an enabling environment for the private sector to thrive.
It is, therefore, up to the local – and international – businesses to research and participate fully in the available opportunities across all the sectors of the economy.
The approval by Cabinet recently of a Bill to repeal the Companies Act in order to strengthen corporate governance is the right way to go as it will reinforce Government’s drive for a superior business environment.
The new Companies Act is designed to enhance Government’s policy on economic empowerment of citizens and the development of micro, small and medium enterprises.
The rationale for the amendment is to simplify the registration procedures and reduce the cost of forming a company.
To illustrate the point that business reforms are being done according to a system, in a thorough and efficient way, the new law would be aligned with other pieces of legislation that came into effect after the enactment of the Citizens’ Empowerment Act and the Zambia Development Agency Act, which are aimed at promoting greater citizen participation and promoting FDI.
The Companies Bill 2015 will be presented to the next sitting of Parliament.
Zambia has realised that the current 1994 Companies Act is no longer in agreement with international best practices following the evolution of corporate law, which has placed emphasis on transparency and good corporate governance.
Studies have revealed the need for reform of the business licensing regime, especially the simplification of the process of company incorporation.
Therefore, alongside the President’s challenge to foreign investors to accommodate local businesses in their ventures, the ongoing reforms and linkages are the authentic steps that would ensure SMEs moved to the next rung on the ladder of doing business.