Business

The state of entrepreneurship in Zambia

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The practice of entrepreneurship in Zambia is relatively new given our historical and cultural context. Today we celebrate the rise of young vibrant entrepreneurs and the pertinent contribution that small and medium businesses bring to the economy but this had not always been the case. Entrepreneurship had its chance to grow in the early 1990s when the country adopted liberalisation policies in 1991. One reason entrepreneurship was not thriving is because Zambians were not building entrepreneurial capacity in the past both culturally and in our education system as well. Around the 1800s, there was a communitarian system that ensured that everyone’s basic needs such as food and shelter were catered for and there was little competition while other parts of the world were competing for resources so as to have means of production. In the early 1900s when colonial powers took over, Zambians were educated up to a particular level that was useful to the colonial powers and therefore, only had limited skills. In the post-colonial era the government decided to use a communist system which also did not really encourage entrepreneurship as everything was owned by the government. Economic liberalisation policies allowed entrepreneurship but a lot of businesses that were set up were owned by foreigners as Zambians lacked the skills and resources required to start businesses.

Today the narrative has quickly changed as entrepreneurship has been identified as an important way to deal with Zambia’s development challenges. Zambia like most African countries is faced with low levels of employment, social exclusion, and rural poverty among other problems. Small and medium sized business are now contributing significantly to Zambia’s economic growth and according to the International Journal of Business, SMEs in Zambia employ 50 percent of the working class. Business men and women are now using entrepreneurship as a way to earn a living and provide for their family. This has, however, led to most businesses being set up to provide income for households as opposed to bringing out the aspect of innovation which is essentially the aspect of applying new ideas and techniques in order to create value. As entrepreneurship is still in its early stages in Zambia there is still a lot of unexplored potential. In the agriculture sector for example, there is potential to add more value to our raw products. For instance, Zambia cultivates cotton on a large scale particularly in Central and Eastern Province. Despite cotton being such an important commercial crop there is little value added to our cotton to turn it into a final product such as clothing, cosmetic and medical items such as tampons, swabs and bandages. This then raises the question of what is hindering entrepreneurship from advancing to the next stage in Zambia and solving a critical problem of value addition which may be a challenge for the nation at large but a huge opportunity for Zambian entrepreneurs.

There are a number of well documented factors that have brought about challenges to business men and women in Zambia. Some of the most important underlying causes of business failures are lack of capital to support business growth, managerial incompetence and even government policies. Baron Mvula, a Lusaka based businessman, says he enjoys doing business in Lusaka but one of the main challenges is the tax system. “In Zambia there is a lot of unexplored potential when it comes to doing business but a big obstacle business people face is the high overhead costs and high taxes. It would be useful if government offered tax exemptions for businesses such as withholding tax exemptions to make the business environment more attractive” Mr Mvula said. Further to this, a businesswoman based in Chipata, Ms Mirriam Mkandawire, indicated that the performance of the economy and the depreciation of the Zambian kwacha severely impacted her clothing retail business. “The poor performance of the kwacha as compared to other major world currencies greatly affects my business as the goods which I order from China tend to be expensive and force me to increase the prices of my goods. This has made my business difficult as I am struggling to sell some of my goods.” This simply shows the importance of a well performing economy and government intervention to support entrepreneurship.

There are many strategies that can address the challenges entrepreneurs face in Zambia. Government support through tax incentives is important to encourage and sustain new business. Access to cheap finance is also of high importance as most microfinance institutions have high lending rates. More entrepreneurship training programs need to be made more accessible to help produce a crop of innovative businessmen and women. There are a number of training programs being offered in Zambia but some of them require a price tag that some business people cannot afford. The government can work with cooperating partners to ensure that training programs are made more accessible to business people. Furthermore, the government needs to work towards a stable economic environment as businesses suffer due to economic instability.

Zambia still has a long way to go when it comes to entrepreneurship. On an encouraging note, Zambians are willing to explore business opportunities and build an entrepreneurship culture and given the right assistance the sector can contribute more to economic development. The government needs to actively support this entrepreneurship boom through providing and effectively implementing good policies that create an enabling environment for innovation and business growth. The private sector can also cooperate and collaborate towards this goal through supporting various entrepreneurship initiatives in the country. Entrepreneurship in Zambia can be described as an infant child that needs a lot of support from its parents because for the country to produce highly competitive business men and women, a lot of deliberate policies need to be put in place to ensure that the business environment is conducive. The government has taken the right steps to support business people, which is evident from the 2021 budget address. More deliberate action will be necessary to not only use entrepreneurship as a tool for poverty reduction but also drive change through innovation and creating new products and services that are beneficial to consumers.

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