Zambia ‘The Real Africa’

A clickable map of Zambia exhibiting its nine provinces.

Zambia, has eight neighbouring counties, namely Angola, Botswana, the Democratic Republic of Congo, Namibia, Malawi, Mozambique, Tanzania and Zimbabwe. Zambia notably the most stable country in Sub-Saharan Africa, the capital city, Lusaka is considered to be an economic and commercial hub of indicative of the positive aspects of pursuing business and investment opportunities in Zambia.

Zambia’s population is estimated at 15 million with a large number of well-educated English speaking and multi-lingual professionals, and a strong entrepreneurial tradition and spirit.

The country is in the process of drafting a new constitution and it is anticipated that a number of legislative reforms which are business friendly will be introduced in the short to medium term.  The judicial system follows English law and a number of reforms are being made to the judicial system, improving it constantly. The Courts, which operate on two levels, Superior and Subordinate Courts, have a suitable legal framework to enforce contracts and uphold them in principle.

With all it has to offer, it is obvious that foreign companies would consider setting up business in this developing economy and it is therefore important to know what the basic rules and requirements are.  To begin with, every person conducting a business or trade within the area of a county is required to register at the Patents and Companies Registration Agency – Zambia (commonly knows as PACRA).

Registering a company takes approximately one week. A private company in Zambia must have at least 2 directors and 1 company secretary. There are  no residency requirements for directors of companies and several banks are able to open a bank account in various currencies.

Once a company is registered, it becomes a legal corporate entity with perpetual succession with legal powers and capacity to do all it requires to achieve its objectives. The objectives and constitution of the company are set out in its Memorandum and Articles of Association.

There are no minimum capital requirements on incorporation in Zambia and a share under Zambian law is a moveable property and transferable in accordance with Zambian law.  Companies having a share capital must assign a nominal or par value to each share.

Kenyan private companies require a minimum of 2 shareholders.  It is not always mandatory to have a local shareholder; however, in certain sectors such as telecoms and insurance, a local shareholder is mandatory. It may, however, be prudent to consider a local shareholder if this would strategically benefit the company.

Where there is a change of control pursuant to an acquisition, competition approval will be required.  Currently there are no minimum thresholds triggering notification – although, this is imminent – meaning that a change of control irrespective of the size of the parties or the size of the transaction will trigger competition approval and this approval process takes approximately two to three months.  In respect of due diligence exercises, particular attention must be given to property ownership rights as well as conducting a thorough tax review.

It is not uncommon for multi-nationals to use an offshore holding company to hold its in-country assets/investments in Zambia. A variety of offshore jurisdictions may be considered and these include Mauritius, South Africa and Dubai to mention a few.  Expatriates working in Zambia require a work permit and must be approved by the Government Department responsible for such Services. The application process normally takes anywhere from between three and six months.

On the down side, Zambia does have exchange control regulations, but these are designed to encourage local business participation and spin offs, employment of local nationals and encourage corporate social investment projects.

In the event of conflict, it is possible for parties to contractually agree to refer any disputes to private arbitration with the rules of arbitration potentially being based on the United Nations model codes, local arbitration rules and  international arbitration rules.

Zambia is without doubt the place to consider for companies looking at penetrating Sub-Saharan Africa and it is no wonder considering the legal principles in place, why it is such an attractive destination for multi-nationals and South African companies wishing to do business in Sub-Saharan Africa. Zambia is co-hosting the UNWTO 2013 General Assembly from 24 to 29 August 2013 and is using the event to show its suitability for tourism and thE Meetings, incentives, conferencing, exhibitions industry

Parts of the Information obtained from Bowman Gilfillan Africa Group


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