Wednesday, 15 October 2014

The Entrepreneurs Quick Guide to the 2015 Budget

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.
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.

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.

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.

There is nothing special.
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.

Empowerment Funds- K123,700,000

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.

No comments:

Post a Comment