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Zambia Association of Manufacturers Commends Government’s Commitment to Domestic Industry Development

The Zambia Association of Manufacturers (ZAM) has praised the government of the Republic of Zambia for its ongoing dedication to supporting the growth of the country’s domestic economy. 

In a statement issued by ZAM’s President, Mr. Ashu Sagar, the association has taken note of the government’s efforts to unlock Zambia’s economic potential by addressing constraints in key sectors, including mining, energy, manufacturing, and agriculture.

The Honorable Minister of Finance has acknowledged the vital role of the manufacturing sector in Zambia’s economic development. He recognized significant developments in subsectors such as ceramics and fertilizers, which have transitioned from being import-dependent to becoming export-oriented.

While the manufacturing sector showed a growth of 4.7% in 2022, it fell short of the target contribution to GDP by 2030. The government’s commitment to enhancing the sector’s competitiveness is evident through initiatives like promoting multi-facility zones for industrialization.

Additionally, measures to simplify work permit issuance for expatriates are being introduced to address administrative challenges.

The government’s increased spending on social sectors, particularly health and education, is seen as vital for Zambia’s future.

ZAM encourages the government to develop a demand-driven skills development program in consultation with the private sector, possibly ring-fencing the Skills Development Levy for this purpose.

The proposal to increase company income tax relief for businesses in rural areas is welcomed. It aims to alleviate operational costs and encourage investments in these regions, ultimately supporting the policy of “taking employment to the people.” ZAM suggests extending the income tax relief rate to all manufacturing firms.

Furthermore, the government’s commitment to developing value chains, including tax holidays for cotton-related businesses, demonstrates a strategic shift.

The budget also extends the commodities eligible for a 2% local content allowance, promoting value addition. However, ZAM recommends extending this allowance to other sectors like leather.

While the government’s intention to introduce, remove, or increase surtax on selected goods is seen as a means to protect local industries, ZAM emphasizes that it should only be applied to goods manufactured locally, not on imported materials.

ZAM also raises concerns about the 1% threshold for a cutrag waste allowance, which may be unattainable for many local producers. They suggest reconsidering this threshold.

ZAM appreciates the government’s measures to support the manufacturing sector but encourages similar efforts across all sectors, including mining and agriculture, as they form the foundation for the manufacturing sector’s supply chain and value addition.

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