By Wesley Ngwenya
Many Zambians and non-Zambians alike who are abroad wonder about what they need before they come to invest in Zambia. Many questions are asked such as what opportunities exist? How much money do I need? What is the business environment like? What is the culture like and how does that affect the way of doing business? What is the political environment like?
These and many other questions need to be asked before one plans on returning home to invest in a business. Each of these questions could be dealt in great detail. However, here are a few things that are helpful as one comes to Zambia to do business be it a Zambian or non-Zambian
What is your product or service?
The first and perhaps most important thing, is to know exactly
what product and service you intend to offer here. You should have done a thorough research on the other players in the business of your interest. What are competitors offering and how do you hope to differentiate yourself from them? If it is a completely new product you intend to launch, what is your market and is it something people want or you intend to create a need for it? Remember, just because you are coming from outside Zambia doesn’t guarantee you instant success for your product or service. In fact, even your unique skills whether it is business, medicine, or some other field will be resented. Therefore, it leaves you the challenge to penetrate the market in a non confrontational but strategic manner.
Small market in Zambia
As you come to do business in Zambia, realize that it is a small
market compared to other markets. Depending on how one looks at it but it can be a great opportunity because the market is still fresh and immature. Which means, it leaves open so many industries untapped that one can venture into. For instance, internet usage is still less than two percent in Zambia. There are other industries such as agriculture and tourism that still need some substantial investment.
Since Zambia is a small market it is also worth to mention that one should avoid overinvesting. Your investment has to match your expected return in a reasonable time. It is unrealistic for one to put in millions of dollars and expect immediate returns. When you come to invest in Zambia be prepared to hang around for a while before you start enjoying the fruits of your investment.
One of the challenges of investing in Zambia is that it is very poor.
The government is poor and runs on borrowed money mostly. Its citizens are equally poor with millions not working. Again despite the poverty, one can look at this as an opportunity. What aspects of investments would benefit the poor? What products and services are most essential to the poor and those living in rural areas? These are good questions to ask as you address the poor’s plight. Solar energy for example is one area that could benefit the majority of Zambians all across the country at the same time make someone some big money.
Lack of infrastructure
The lack of adequate infrastructure presents a real challenge for
many potential investors. One, therefore, has to be prepared to face the worst. If, for example, your investment is going to be in transportation, then you have to buy vehicles that will stand the Zambian roads. You must realize that you will be spending more on vehicle maintenance simply because the roads are not as good.
Again, the lack of infrastructure should not only be a challenge for an investor but also an opportunity. For example, office space is becoming an issue in especially the capital Lusaka. Those who are investing in real estate will be reaping it big soon. Lusaka cannot get enough offices, shopping malls, play parks, schools, etc.
Knowing the tax laws of Zambia
If you are importing something into the country it is important to
find out what the customs and tax laws are before you come in. If you are Zambian, you actually get tax breaks for importing vehicles, machinery and household goods provided you have been out of the country for a specified period of time. This is a great opportunity to save on customs tax because it is very costly to import goods in Zambia. To avoid the runaround with the officials please make sure you keep all paperwork such as receipts, etc.
Depending on the industry you can get tax breaks for a certain period where you do not pay income tax to the Zambia Revenue Authority. Also if you do not make a certain amount of revenue you can get some tax exemption. Be sure to find out from other agencies on paying pension for your employees if you plan on employing others.
Registering your business
Registering a business in Zambia is quite easy. You pick up the forms from the Registrar of Societies, fill them in and have all the necessary people sign them. Attach copies of articles of association as well as identification for all the directors. The whole process of registering a business takes less than a week provided you have all the required material. You do not have to be Zambian to do this.
Political influence on business
Many times politicians do not interfere with private businesses. It is important to not that Zambia is a democratic country which has general elections every five years. Politicians especially those in the ruling government have a lot of influence on state controlled companies. To do business with a state controlled company or a government department, you have to know someone who is senior. It is important to point out that in Zambia, the government is the biggest spender and almost everything revolves around the government. Businesses that do business with the government are the winners on the Zambian market. It is in your favor to be friends with the politicians and more benefiting if you can get key accounts with the government.
Poor work culture
Zambia has generally poor work culture especially in government run institutions. Workers are not usually in a hurry to do their work and meet deadlines. They get to work late and leave early. The customer service is very poor. You can walk in a store and the attendants will not pay attention to you. Instead, they will continue reading the newspaper or their conversations.
Therefore, as one pursues business in Zambia it is important to understand its people so that you can devise ways to overcome frustration. If you are going to employ people or have business partners, be sure they know what your work culture is and what your expectations will be in the relationship.
Be prepared to wait for a long long time
In Zambia, you have to be prepared to wait for everything. If you are from a western country
like the United States you will immediately notice the difference. In the west people are usually in a hurry to meet deadlines or get work out of their way. However, in Zambia people are not usually in a hurry to do work. Even when you have an appointment with someone, they will come 20 or 30 minutes late without being apologetic. Therefore, you need a lot of patience to do business here in Zambia.
Bribing–know when to do
Bribery is against the laws of Zambia. However, it is a common practice here in Zambia. It is difficult to get anything done without giving or promising an official something. This is especially applicable to big business contracts in government or private sector. Every time you have a business proposal to another institution, the official on the other side is asking, “What is there for me?” Depending how badly you want the business from that institution, sadly you will need to find ways to motivate that official.
Let me clearly state that I do not approve bribery but merely stating what the trend is here in this country. It is very difficult to play it clean in this country when most of your partners around you are playing it dirty. This is not to say, too, that there are no businesses you can work with who will not expect a bribe from you.
Zambians are formal
Zambians are generally formal people who like to be addressed
formally as Mr. John even when you use their first name. First names are rarely used in the business world. When meeting with other business partners make sure that you are dressed formally with a suit and tie. In this country, people respect someone who is “smartly” dressed as it is referred.
Know that “yes” is sometimes “no”
Finally, when a Zambian says they will be able to do it do not take
their word for granted. They will actually agree with you even when they disagree. I have personally found it helpful to tell people that it is okay for them to say no if they are not able. This will, oftentimes, open them up and be able to state clearly whether it is a real yes or real no.
These are just a few things that may be helpful as far as doing business in Zambia. Since Zambia is a young economy, investment opportunities are numerous. For Zambians living abroad, it is very important that you keep in touch with what is happening here so that you can explore the opportunities on establishing businesses as a well of helping the many Zambians here.