The Zambian government has recently unveiled its budget for the year 2024, a financial blueprint that aims to stimulate economic growth, foster sustainable development, and alleviate the tax burden on its citizens. This budget is particularly significant for businesses operating in Zambia, as it introduces several new measures and incentives across various sectors. In this article, we will delve into the key highlights of the Zambia 2024 Budget and explore what they mean for businesses.
Highlight 1: Revenue Estimates and Measures
- Total Revenue: K177.9 billion
- Tax Revenue: K114.5 billion
- Non-Tax Revenue: K26.5 billion
What This Means for Businesses
The government aims to balance its budget through a mix of tax and non-tax revenues. Businesses should prepare for a stable economic environment but should also be aware of any tax changes that could affect them.
Highlight 2: Financing Through Debt
- Total Financing: K33.3 billion
- Domestic Financing: K16.3 billion
- Foreign Financing: K17.0 billion
What This Means for Businesses
The government plans to finance part of its budget through debt, which may lead to future tax increases to service this debt. Businesses should factor this into their long-term planning.
Highlight 3: Pay As You Earn (PAYE) Regime
- Exempt Threshold: Increased to K5,100 from K4,800
- Top Rate: Reduced to 37.0% from 37.5%
What This Means for Businesses
The changes in the PAYE regime aim to provide some relief to workers, which could lead to increased consumer spending.
Highlight 4: Investment in Power Generation
- VAT Refund Period: Increased to 7 years from 4 years for hydroelectricity generation.
What This Means for Businesses
This measure aims to attract more investment into the power generation sector, potentially leading to more stable electricity supplies for businesses.
Highlight 5: Geothermal Energy
- Customs Duty: Removed on machinery, equipment, and other goods designed for geothermal energy activities.
What This Means for Businesses
This is an incentive for businesses to invest in geothermal energy projects, which are sustainable and eco-friendly.
Highlight 6: Media and Film Industry
- Customs Duty: Suspended on selected media, film, and music equipment for a period of 3 years.
What This Means for Businesses
This measure aims to spur growth in the media and film industry, providing opportunities for businesses in these sectors.
Highlight 7: Manufacturing Sector
- Local Content Allowance: Extended to sorghum and millet.
- Company Income Tax Relief: Increased to 20% from 14.2% for businesses in rural areas.
What This Means for Businesses
These measures aim to promote local investment in the manufacturing sector, providing incentives for businesses to invest in rural areas.
Highlight 8: Excise Duty on Clear Beer
- Rate: Reduced by 50% for small and medium manufacturers that produce less than 500,000 litres per annum.
What This Means for Businesses
This measure aims to support small and medium-sized manufacturers in the beverage industry, potentially leading to lower prices and increased sales.
Highlight 9: Cotton Value Chain
- Tax Holiday: 5-year tax holiday on profit for local producers of cotton seed and ginning of cotton.
What This Means for Businesses
This measure aims to revitalize the cotton value chain, providing opportunities for businesses in the textile industry.
Highlight 10: Railway Operations
- Customs Duty: Removed on the importation of rolling stock, namely, wagons and locomotives.
What This Means for Businesses
This measure aims to improve railway operations, potentially leading to more efficient transportation of goods.
Highlight 11: Economic Affairs
- Total Allocation: K39.8 billion or 22.3% of the total budget.
- Road Construction: K8.3 billion for the construction, rehabilitation, and maintenance of roads.
- Agriculture: K13.8 billion allocated, with K8.6 billion for the Farmer Input Support Programme.
What This Means for Businesses
The significant allocation to economic sectors aims to unlock growth potential, providing opportunities for businesses in construction, agriculture, and other sectors.
Highlight 12: Zambia Credit Guarantee Scheme
- Allocation: Increased to K386.0 million from K150.0 million.
What This Means for Businesses
The increase in allocation aims to establish a financing and credit window for small-scale farmers, public service workers, and emergent farmers, thus encouraging entrepreneurship.
Highlight 13: Animal Health and Mining
- Animal Health: K498.8 million allocated for procurement of vaccines and animal health extension services.
- Mining: K160.0 million for geological mapping to support exploration and investments.
What This Means for Businesses
These allocations aim to diversify the mining sector and improve animal health, which could benefit businesses in these sectors.
Highlight 14: Community Development Fund (CDF)
- Allocation: Increased to K4.8 billion, with each constituency receiving K30.6 million.
What This Means for Businesses
The increase in CDF allocation aims to provide more resources directly to communities for local development, which could lead to increased business opportunities at the local level.
Highlight 15: Entrepreneurship and Air Transport
- Entrepreneurship: K391.9 million allocated to the Citizens Economic Empowerment Commission.
- Air Transport: K700.7 million for the rehabilitation and upgrade of various provincial aerodromes.
What This Means for Businesses
The allocation for entrepreneurship aims to promote business activities, while the air transport allocation could make Zambia a regional hub for air connectivity.
The Zambia 2024 Budget is a multi-faceted financial plan that aims to address a wide range of economic, social, and developmental challenges. Its highlights offer a glimpse into the government’s priorities for the coming year, providing businesses with valuable insights into potential growth areas and changes in the regulatory environment. From tax reforms to sector-specific incentives, the budget aims to create a more conducive environment for business growth and investment. Businesses should, therefore, take the time to understand these changes and adjust their strategies accordingly to align with the government’s fiscal policies and take advantage of the opportunities presented.
You can download the budget speech here.
