New Dawn scores big in boosting SMEs
Published On August 16, 2023 » 1031 Views» By Times Reporter » Business, Columns
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. By Ketra Kalunga

By KETRA KALUNGA –
THE United Party for National Development (UPND) administration has recognised the private sector as a key driver of economic growth and has, in the last two years, introduced measures for the to effectively drive economic development.
Over the period under review, the UPND administration has shown commitment to continue engaging the private sector in the economic transformation agenda for job creation and poverty reduction.
This has been demonstrated by the move to increase funding to the Citizens Economic Empowerment Commission (CEEC) from K365 million to K377 million this year to fund economic empowerment initiatives.
To foster growth of the private sector by addressing the challenges of access to finance, the UPND administration created the Ministry of Small and Medium Enterprise Development.
This was a milestone in the promotion of the Small and Medium Enterprises (SMEs) in the sector as the new ministry will ensure the growth of SMEs in the country to promote job creation.
So far, the ministry has empowered about 80,000 marketeers countrywide through the marketeer booster loans that was launched last November which is being managed by the CEEC.
The increased Constituency Development Fund (CDF) is another way in which the government is supporting growth of the private sector to drive economic development.
In its first budget the UPND increased CDF from K1.6 to a whooping K25.7 million and in this year’s budget, the allocation has increased to K28.3.
Economic and financial experts have acknowledged the support that the UPND administration is rendering towards the private sector to help players participate in the economic development of the country.
Economist Emmanuel Zulu says in an interview that private sector development has been supported by the government through the CEEC and CDF.
He says the two financing channels have helped the private sector access cheaper capital which has been the biggest challenge for the sector to grow and participate actively in the economy.
“Although CEEC and CDF had their own technical issues that made it difficult for people with brilliant business proposals to access cheaper capital and participate actively in the economy, the initiatives have really helped,” he says.
Mr Zulu further says another way in which the government is encouraging private sector participation is through the formalization and licensing of businesses.
He says the government has been pursuing the single-licensing mechanism to cut on the time lost during the licensing procedures.
The economic expert says the process has advanced as businesses are now able to get more than one service from one facility, which is a plus.
Mr Zulu says the private sector would like to see more government effort in terms of increasing facilities for accessing cheaper capital to enable more Zambians to actively participate in growing the economy.
“We know the Development Bank of Zambia (DBZ) could have been key in providing development finance especially for huge project that can allow Zambians to participate in bigger ventures such as the manufacturing, production and processing, “However because of the incapacitated nature of DBZ we have not seen many Zambians participating in business at that high level, mostly they have been at the SME level which is very unfortunate,” he says.
Mr Zulu says going forward the government should put in place tax incentives that will ensure that SMEs grow into big businesses.
The tax rate should be favourable to attract more people to formalize their business and enable the government to increase its revenue base, he says.
Financial expert Trevor Hambayi says the government has put in place a lot of policies some of which, however, favour the foreign entities more than the local ones.
Mr Hambayi says this matter needs the urgent attention of the government for the country to bridge the financing gap of $1.3 billion required for the private sector to be productive.
He says one way in which this can be done is through tax incentives that will enable the private sector to invest in the economy.
“The tax position is that local SMEs are paying four per cent turnover tax on a monthly basis which on an annual basis is 44 per cent, “This is the highest tax rate in the country which is higher than the entities that are generating revenue like the mining and banking sectors among others and is limiting the capacity of the private sector to be able to invest for growth,” he says.
Another financial expert Andrew Chibuye says successful debt restructuring deal has provided an opportunity for growth in the private sector.
Mr Chibuye says there are opportunities for growth in the key priority areas of economic growth that the government has identified which are manufacturing, mining, tourism and agriculture.
He says the government has in the 2022 and 2023 budgets given close to K10 billion incentives for businesses, to stimulate economic growth.
Mr Chibuye adds that the tax rate has reduced corporate tax from 35 per cent to 30 per cent and this has been done to promote growth of the private sector so that they can contribute to the development of the country.
Indeed, economic development of the country cannot be left to the government alone because it is not possible for the government to deliver development on its own.
Therefore, the government has been on the right path by recognising the private sector as a key driver of economic growth and reaffirmation of its stance by putting in place measures to ensure its growth for economic development.

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