It is no secret that these are
difficult times for Zambia, and the budget which was presented by Honourable
Alexander Chikwanda, Minister of Finance on 9 October 2015 was supposed to shed
some light on the coming year. Different people, look for different things in
the 22-page document. Employees want to know if there have been changes to Pay
As You Earn or ministries want to know if their funding has been increased or
decreased. But what did this budget have for the Small and Medium Enterprises
who have been one of the hardest hit or the entrepreneur who is seeking to make
an invest that will reap rewards. If you are an SME or entrepreneur the
pronouncements below should grab your attention
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| Budget briefcase |
Agriculture
There is nothing significantly new in
this year's budget for people interested in agriculture. It is also a roll over
from last year's budget. There is still a strong emphasis on fish farming,
either the minister likes fish or there is potential there that Zambians should
start paying attention to. The minister has gone one step further by setting up
the Fisheries Development Fund to provide K5 million credit to small scale fish
farmers. Farming bream may just be looking attractive.
Energy
Perhaps one of the most disappointing
elements of the budget was the energy section. There were elements for long
term investments by making the electricity pricing more attractive. The message
for the SME is brace yourself the energy crisis will not be solved anytime
soon.
Tourism
The government has scheduled operations
for a national airline to commence in 2016 which is meant to attract tourists
to the country, but I would not be holding my breath for this. Apart from that
there was nothing for the SME or entrepreneur here. For a country that talks of
diversifying its economy it is a disappointment there wasn't more here.
Manufacturing
This had perhaps the most substance
of the other sectors. The minister mentioned the Value Chain Cluster
Development Programme to promote local value addition. The areas for this
programme are mango juice production, processing fish (fish appears again),
rice, dairy, cotton, honey and forestry products. The programme is being
implemented in 42 districts and their plans to expand. Further, there are plans
to recapitalise the Development Bank of Zambia, and National Savings and Credit
Bank to support SMEs. Also as of 1 September 2015, it is now mandatory for all
public sector departments to procure locally manufactured goods for all
contracts which are valued at K3 million or less. If I was a manufacturing
company I would make every public department know what I manufacture.
Mining
Absolutely nothing
Transport
and Infrastructure Development
Some road projects have been reserved
for companies where Zambians hold 50.1 percent of the shares. These are road
projects for the Link Zambia 8000 programme.
Where is the
Money?
§ K5 million for Fisheries
Development Fund
§ K187.5 million to Citizens
Economic Empowerment Fund
§ K150 million to the Action
Plan on Youth Employment and Empowerment
§ K35.7 million to Women's Economics
Empowerment Funds
§ K49.5 million for youth
skills training and development
Taxes Up or
Down?
PAYE- No changes
Beer- I tried to understand
the rationale for this but could not find one. The minister said it was to promote
the manufacturing sector, I do not see how. The minister plans to suspend
excise duty on clear beer to 40 percent from 60 percent. I guess beer could be
the secret formula to start our manufacturing revolution.
Property- Property transfer tax
has been reduced from 10 percent to 5 percent. Hopefully more people will be
selling their houses and land soon and paying the tax.
TV and Radio-
Lucky are
they who plan to set up TV and radio stations. The minister proposes to suspend
customs duty on transmission apparatus for television and radio for a period of
two years.
Wood- Export duty of 40
percent will be placed on unprocessed wood and 20 percent on semi processed
wood. Further, customs duty increases to 40 percent on all wood and wood
products.
Edible oils- Customs duty rate on
refined edible oils doubles from K2.20 to K4.0 per litre. This is meant to make
imported edible oils more expensive and encourage local production.
Motor
Vehicles-
There is bad news for the vehicle traders and buyers. A surcharge of K2,000
will be placed on motor vehicles older than five years from date of
manufacture. This means any vehicle that was made before 2010 will carry this
charge on top of the customs and excise duty. The exception is trucks and
buses.
The charges to the taxes will take
effect on 1 January 2016.
The greatest beneficiaries from the
2016 budget are SMEs and entrepreneurs in the manufacturing sector. A lot of
the tax breaks and incentives are given to the sector which is a positive. There are a few sprinkles here and
there for other sectors too such as people interested in fish production. It is
not an exciting budget and it is pretty much carried forward from 2015. One big
disappointment is that there is nothing extraordinary in the tourism sector pronouncement
even though it is a foreign exchange earner and one that we have a relatively
competitive advantage to other countries in the region. SMEs and entrepreneurs
have a few opportunities that they can exploit and for some of the sectors
funding should be readily available. Overall on a score of 1 to 10. I would
give this budget a 6.
