Ndola District Chamber of Commerce and Industry President Paul Chisunka has called on the New Dawn government to address the high cost of doing business in Zambia as a way of supporting entrepreneurship.
In commemorating Global Entrepreneurship Week, Mr. Chisunka cited expensive, inadequate financial capital, limited access to markets, a cumbersome regulatory and licensing regime as some major challenges affecting entrepreneurs.
He advocated the enacting of Local Content legislation to prompt major buyers such as the government and the mines to make a conscious deliberate effort to strengthen local value chains.
Mr. Chisunka said the Ndola Chamber believes that the ongoing shift towards a business-friendly environment is the best catalyst to unleash Zambia’s entrepreneurial spirit.
“To support and nurture entrepreneurship, we need to urgently address severe constraints such as the high cost of doing business in Zambia which is further compounded by expensive and inadequate financial capital, limited access to markets, a cumbersome regulatory and licensing regime, insufficient R & D, weak governance and management systems, low skills and entrepreneurial competencies, as well as a low uptake of modern technologies to help revolutionize business processes and improve the quality of products and services offered to consumers. We also believe that the fastest way to orchestrate Entrepreneurship Development and super-charge the Zambian economy is to open up markets by enacting Local Content legislation to prompt major buyers such as government and the mines to make a conscious deliberate effort to strengthen local value chains and local supply chains by buying from Zambian manufacturers, service providers, and other suppliers,” Mr. Chisunka said.
“On the Policy and regulatory front, entrepreneurs are largely represented amongst MSMEs so the Revised MSME Policy is highly anticipated. We expect the new MSME Policy to re-define and re-classify MSMEs in a manner that does not expose them to unfair competition. The Policy should promote MSME growth and development by introducing higher turnover brackets and employee thresholds, and accord MSMEs better tax and regulatory treatment, as well as reduced statutory fees. Single licensing, simplified administrative procedures and reduced paperwork for MSME registration and compliance will provide immediate financial relief and encouragement for MSMEs to regularize themselves and become compliant. This will increase the number of MSMEs that can be on-boarded into the mainstream economy. If we do it properly, it will result in a higher rate of expansion in the Zambian economy through the combined economic activities of various MSMEs spread across the country in both urban and rural areas,” he stated.
Mr. Chisunka said there is a need to create a sustainable business ecosystem that links entrepreneurs to indispensable partners, thereby making it possible to undertake profitable ventures in a socially and environmentally responsible manner that benefits communities and generates revenue for the government.
“To build a critical mass of entrepreneurs, Zambia needs infrastructure and deep rooted synergies involving the Government, Academia, Private Sector, Civil Society, and Development Partners. This will allow us to draw powerful capabilities and resources that each respective stakeholder is able to bring in the form of policy, research, commercial skill, best practices, capital and international facilitation. The combination of these factors will create a sustainable business ecosystem that links entrepreneurs to indispensable partners, therefore making it possible to undertake profitable ventures in a socially and environmentally responsible manner that benefits communities and generates revenue for the government. In order to reduce the cost of doing business and the cost of living, we urge the government to pay particular attention to tackling cost related bottlenecks in the business regulatory environment and to completely move away from a high tax regime,” Mr. Chisunka said.
He said lower tax rates can also encourage banks to reduce interest rates and make money more affordable to borrow for businesses and households.
“We emphasize that high taxes and over regulation are a disservice to our economy because they damage the production and operational efficiencies of businesses which makes goods and services expensive thus adding inflationary pressure and weakening the purchasing power of consumers. We propose that lower tax bands and policy incentives be introduced for MSMEs, cottage industries, and cooperatives. This will act as a countervailing measure against unfair competition and help to revive Zambia’s industrial base by promoting value addition and providing necessary safeguards to infant industries.”
“Research shows that higher tax rates can sometimes decrease the tax base, which will lead to the decrease in tax revenues even if the tax rates are high. The case to systematically reduce taxes is therefore strong and cannot be over emphasized because, by identifying and lowering high taxes we can boost local and foreign investments resulting in more output, higher employment, better standards of living, and more tax revenue. Lower tax rates can also encourage banks to reduce interest rates and make money more affordable to borrow for businesses and households,” he said.