The Budget was presented to the National
Assembly by the Minister of Finance Hon. Alexander Chikwanda on 10 October
2014. Every year people anticipate the budget to get a feel of what to except
in the coming year and how much of the slice of the national cake has been
given to them. For the business minded we review the budget to see where the
opportunities lie. Well not every business minded person will have the time to
read the 24 paged documented. So this is the summary for those entrepreneurs
too busy (or lazy) to read the entire budget presentation.
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| Budget Briefcase |
The theme
for the 2015 Budget is, "Celebrating
Our Golden Jubilee as One Zambia One Nation by Making Economic Independence a
Reality for All." From the theme one can get that the government will
continue to strive for economic independence.
The minister announced that in the coming year it is estimated that
120,000 new formal jobs will be created in the private sector. I reckon these
120,000 will probably come from the financial and information technology
sectors. He further mentioned that inflation is expected to remain in the
single digit, which is a good thing.
Perhaps one
of the most interesting things in the 2015 Budget is that Government will
reduce its shareholding in ZCCM Investment
Holding from the current 87% to 60%. Therefore offloading 27%
of the shares to the Zambian citizens. ZCCM-IH has shares in a majority of the
Zambian Mines and for the Zambians who want a stake these look like attractive
shares to consider purchasing.
The key
industries singled out as the key sectors in the budget are agriculture,
tourism, manufacturing and construction sectors. I wonder why the arts are not a key sector. One can only expect
that there will be incentives in these key sectors to make them flourish and be
the engines of the above 7% GDP growth rate that the Governments expects to
achieve.
Agriculture
For
entrepreneurs into agriculture the budget mentions that Government is keen on
diversification away from maize as it accounts for over two thirds of the
entire agriculture budget. This would imply that Government will promote other
crops such as rice and millet. They are also looking at supporting conservation
farming involving a total of 84,000 farmers in 31 districts. The Minister of Finance did mention that the
national fish consumption stood at 130,000 metric tonnes. The current
production stood at 95,000 metric tonnes. This implies that the additional
35,0000 metric tonnes had to be imported. He also noted that only 20,000 metric
tonnes of the 95,000 metric tonnes
production was via aquaculture. Therefore, there would be reforms that
would assist enterprising citizens in the private sector to get into
acquaculture. So if you were considering
fish farming, next year might me a good time to start. The critical thing I
found missing from the agriculture sector was the marketing side of the
produce. There are definitely flaws in the system and the farmers in the rural
areas are especially susceptible to exploitation and one would have figured
that there would have been something in the budget to help give them fair price
for their produce.
Manufacturing
Next year is
going to be a good year in manufacturing. The minister directed all Government
Departments to give preference to locally produced goods in line with the
Industrialisation and Job Creation Strategy. Also effective 1 January 2015
Government will remove the voucher system applicable on such imports.
Government is committing more funds to recapitalise DBZ (the amount was not
mentioned). Additional funds will be
allocated to the Citizens Economic Empowerment Commission to support value
chain development. The address mentioned that out of the 1,526 approved
projects this year 1,072 projects valued at K48 million have since been funded.
92% of which are in rural areas. I could explain why urban applicants complain
that they find it difficult to receive funding from CEEC, try going to the
rural areas. I would like to know the
success rate of these businesses. The Government also intends to create
Industrial Clusters to promote metal fabrication, timber, and agro-processing,
aquaculture and automotive industry.
Tourism
There is
nothing special.
Mining
There is
nothing special
Water and Sanitation
The minister
urged local authorities to embark on waste to energy projects through the
Public Private Partnership arrangement. If anyone has a business idea around
this, it might be the right time to share it with the local authorities.
Monetary and Financial Policies
Government
still recognises that there are still many citizens in the rural areas who
remain un-banked. Therefore, it will be keen on promoting initiatives that will
ensure that banking services are taken to the rural areas especially through
agency banking. There will also be the implementation of the National Strategy
on Financial Education.
Private Sector Development Reform
In attempts
reduce the cost of doing business the provision of the Business Regulatory Act
of 2014 will be enacted. This will mainly be around the issuing of licences and
the streamlining of the procedures.
Allocations
Empowerment
Funds- K123,700,000
Taxes
If you are
considering entering the transportation business you may have to think twice
and re-work those business plans. This is because your costs are going to get
higher. The Minister has doubled the presumptive tax for individual operators
of public service vehicles based on vehicle sitting capacity. On the other hand
if you are entering into manufacturing you have a lot to smile about. There
Minister has proposed to increase customs duty on explosives to 25% and on
roofing sheets to 30%. Happy are the
local explosives and roofing sheet makers. There has also been a removal of
5% customs duty on aviation fuel. Hopefully, this will reduce air tickets and
also increase the number of flights into the country.
Overall the
2015 Budget, has nothing really spectacular about it. I did not find anything
to jump up about as an entrepreneur. There were not as many incentives to drive
any particular sector whether agriculture, tourism, manufacturing forward in
grand scale. For a country that is ever crying for the diversification of the
economy there was nothing much in this budget to indicate that we are on our
way towards that. The budget was also the same as last years with a few tweaks
here and there. The only worth noting element was the offloading of some of the
ZCCM Investment Holding shares to the Zambian public. I guess entrepreneurs
will just have to hassle more.
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