IMPORTANCE OF PUBLIC PROCUREMENT ORDERS
The Zambian business environment is divided into three major sectors; parastatal companies (inclusive of Zambia Consolidated Copper Mines (ZCCM) the countrys chief foreign exchange earner), private companies (inclusive of foreign companies) and government (including local government) departments.
The government is implementing a privatisation programme which is progressing steadily and which will eventually place all parastatal companies in private hands. The government does however, have stakes in most of the strategic sectors (such as telecommunications, electricity, broadcasting and railways).
Purchasing by tender is the chief means of procurement by both public, private and parastatal institutions, exclusive of ZCCM who have a long established procurement centre in the UK.
Principal legal provisions
Purchasing by public tender is administered by the Zambia National Tender Board (ZNTB) a government regulatory body established by an Act of Parliament. ZNTB has guidelines (details of which can be obtained directly from address given in Annex I) that must be followed broadly by any institution wishing to purchase by public tender.
Procurement in the public sector is made by the following agencies:
1 Department Heads in Ministries/Provincial Government/Parastatals up to K200,000 through informal tenders.
2 Ministry Tender Committee/Provincial Tender Committee Parastatal Tender Committee - in respect of
2.1 Value between K200,000 and K5 million through informal tender and
2.2 Value between K5 million and K25 million through formal tenders
2.3 ZNTB - in respect of value above K25 million through formal tenders.
The above procurement limits may be amended from time to time. For informal tenders, ie value not exceeding K5 million, purchases are expected to be made only from local suppliers and paid for in Zambian Kwacha.
Zambia is a member of two regional economic bodies, Common Market for Eastern and Southern Africa (COMESA) and Preferential Trade Area (PTA). Trading amongst member countries is encouraged in order to promote economic development, and special tariff arrangements are in place for this purpose. Details of these can be sought directly from PTA and COMESA Secretariat. (See Annex II).
Customs duties are levied on all imported goods and services according to the Harmonised Commodity Description and Coding system. Duties range from 0%-30%. Full information on the customs duty for any particular product is available from the Department of Customs and Excise.
Department of Customs and Excise
PO Box E635
Tel: +260 1 222130
Fax: +260 1 221923
The Zambian tax system consists of three main areas, income tax, company tax and value added tax (VAT). There are also withholding taxes on interest, dividends, loyalties, rents and consultancy fees, now at 10%.
In order to overcome the bracket creep which pushes the lower income earners into higher brackets of taxation the government has revised tax bands. Under the new bands wage earners and self employed individuals with annual incomes of K600,000 and below are exempt from tax. Penalties apply for late submission of tax returns. Income tax rates for individuals earning above K600,000 per annum range from 10% to 30%. Company tax rate is 35%, reduced to 30% for companies listed on the Lusaka Stock Exchange.
As of July 1994, a system of VAT replaced the former sales tax at a rate of 20%.
Zambia has double taxation agreements with a number of countries including Denmark, Finland, France, Germany, India, Ireland, Italy, Japan, Netherlands, Norway, Sweden, Switzerland and the UK.
In order to ensure up-to-date information on tax laws, rates and/or amendments, advice should be sought from a firm of chartered accountants (see Price Waterhouse, Annex II).
PRINCIPAL CHARACTERISTICS OF PUBLIC PROCUREMENT ORDERS - ADVICE TO EXPORTERS
Entry in register of suppliers
Registration of approved suppliers is agreed by a large public sector purchase organisation involved continuously in procurement activity on a repetitive basis. For this purpose interested suppliers should apply for registration to the purchasing agency (see Regulatory framework), by providing the required information and paying a nominal fee. This formal registration provides listed suppliers with certain advantages over non-listed tenderers. Registration of all foreign suppliers is done by ZNTB only. Foreign suppliers must produce evidence of formal representation, and details of arrangements for full after-sales-service in Zambia. Full details of regulations relating to foreign suppliers can be obtained from ZNTB.
Language of submission
English unless otherwise indicated.
ZNTB can provide details of these requirements, which may vary from case to case.
Standards and professional requirements
Specifications normally accompany tenders but Zambia as a general rule requires goods supplied to conform to British Standards Institutes (BSI) and/or the Zambia Bureau of Standards specifications.
Publication of invitation to tender
With the exception of informal tenders, tenders are invited from suppliers worldwide. The tender notices are published both locally and/or in the international press where it is deemed necessary. ZNTB can be approached directly for full details of any tenders that have been published.
Degree of openness of public procurement market to non-national suppliers
The public procurement market in Zambia is fairly open as the local industrial base is very limited. It is however advisable that non-Zambian companies operate through a local agent, if only to ensure quick access to tender documents, notice of extension of tender closing dates and a presence at tender bid opening sessions.
Size of public procurement market
This is difficult to estimate precisely, as statistics of this nature are not readily available. It can be said that this market, with the implementation of the privatisation programme, is shrinking as regards parastatal companies. The donor driven economy means that government sector purchasing will fluctuate according to the availability of funding.
The main public procurement opportunities are most likely to arise at present in aid-tied government programmes, and at a later stage in former parastatals whose new private owners will be seeking to rehabilitate aged and/or obsolete facilities.
PRINCIPAL ORGANISATIONS AWARDING CONTRACTS