Business

Infrastructure vital for growth, job creation, wealth and development

Investment Forum with MARGARET CHIMANSE
GOVERNMENT attaches great importance to employment creation as the top-most strategy for ensuring stability of society and overall growth of the economy. Government is committed to continue focusing on industrialisation, employment and wealth creation in order to reduce poverty and inequality.
This is being achieved by investing in sectors that have been identified by government to best promote employment for the youthful population, significantly increase productivity in the economy, contribute to higher and inclusive economic growth, and develop the rural areas to narrow the urban-rural divide.
Among these important sectors on government’s top list is the infrastructure sector. Infrastructure serves as a central delivery mechanism in achieving sustainable economic development. Its development still continues to be a factor for growth, employment creation, economic diversification and human development in Zambia.
According to the Revised Sixth National Development Plan, infrastructure development is the main anchor of the development process in key areas of focus, whereas ICT and Science and Technology will help accelerate the development process. Infrastructure development largely includes both social and economic infrastructure and is a major expenditure item in the revised plan.
To cover the infrastructure gap and improve access to quality and affordable infrastructure service, government has invited the private sector to participate in the construction, rehabilitation and maintenance as well as financing of public infrastructure and services.
This is as a result of a huge infrastructure financing gap, and government is aware that resources from the public sector and development partners are limited and can only cover part of the financing needed. For the private sector, these partnerships present opportunities that will enable them take advantage of the underdeveloped and poorly managed utilities to enable them attain profit optimising objectives and sharing of risks.
There are several opportunities that exist in the ICT, Energy Infrastructure and Real Estate sectors. For ICTs, research has shown that investment in broadband has a multiplier effect in terms of job creation such that one direct job creates between 1.4 and 3.6 indirect and induced jobs. This is because broadband brings high opportunities for self-employment and content development such as production of local films and ICT applications are enhanced.
The focus of the government therefore is to establish an environment that encourages networking of services and applications; promoting e-commerce, e-agriculture, e-health and e-education and trade promotion programmes for goods and services.
In addition, there are opportunities in the energy infrastructure in the country due to the fact that Zambia is endowed with a wide range of energy resources, particularly woodlands and forests, hydropower, coal and renewable sources of energy.
Zambia has about 6,000 MW unexploited hydro power potential, while only about 2, 434.3 MW is the current installed capacity. On the other hand, the demand for power in the various sectors of the economy continues to grow. Demand for electricity is likely to increase to creating a deficit of more than 550 MW in Zambia alone. Opportunities in the power sector include electricity generation and transmission, refineries, storage facilities and pipelines for petroleum.
Lastly, Zambia has been facing a very critical shortage of housing since independence. There is a definite shortage of housing supply in many urban centres, but particularly in rapidly growing towns and districts. Government estimates suggest a backlog of two million units across the country, and recommends an annual delivery rate of 200,000 units to meet demand in the next 10 years.
In order to address the current housing deficit, government has created an enabling environment to provide affordable, quality and adequate housing to the majority of Zambians. To complement these opportunities, government through the Zambia Development Agency (ZDA) provides for fiscal and non-fiscal incentives for companies meeting set investment thresholds. Projects that qualify may be new or existing ones undergoing expansion or modernisation.
Investments of US$500,000 and above in a Multi Facility Economic Zone (MFEZ), an Industrial Park, a Priority Sector and investment in a Rural Enterprise under the ZDA Act, qualify for both fiscal and non-fiscal incentives. The incentives include Zero percent tax rate on dividends for 5 years from year of first declaration of dividends, Zero percent tax on profits for 5 years from the first year of operation and Zero percent import duty rate on capital goods, machinery including specialised motor vehicles for five years.
Additionally, the above category of investors are entitled to non-fiscal incentives, which include guarantees and protection against state nationalisation, free facilitation for application of immigration permits, secondary licences, land acquisition and utilities.

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