Zambia expects to clinch $1 billion in Chinese investment and loans at the recent China-Africa summit in Johannesburg. Presidential spokesman Amos Chanda said Zambia was expected to conclude deals with China in infrastructure projects such as roads, railways, power generation as well as agriculture.
Zambia and China were also likely to sign an agreement for the construction of two modern hospitals, Chanda said. Chinese firms have invested heavily in mining and other sectors in the southern African nation over the last 10 years with investment exceeding $3 billion in 2014 largely based on the nations’ bilateral agreement on the Zambia-China Cooperation Zone (ZCCZ), according to latest Chinese embassy estimates.
An electricity shortage and weaker copper prices have put pressure on Zambia’s mining industry, threatening output, jobs and economic growth in Africa’s No. 2 copper producer. China plans to invest a further $900 million over the next five years in an economic zone, where firms would be exempted from some taxes such as customs duties.
The Zambia–China Cooperation Zone (ZCCZ) was the first Chinese economic and trade co-operation zone to be established in Africa. The project emerged from converging interests on both sides: China’s interest in Zambia’s copper reservoirs and Lusaka’s desire to develop a manufacturing base around its mining sector.
The policy briefing analyses how the zone came into being, its achievements and the current challenges it faces. ZCCZ zone enterprises are entitled to the following incentives:
-Zero percent tax rate on dividends for 5 years from year of first declaration of dividends.
-Zero percent tax on profits for 5 years from the first year profits are made. For year 6 to 8 only 50 percent of profits are taxable and in years 9 and 10 only 75 percent of profits are taxable.
-Zero percent import duty rate on raw materials, capital goods, machinery including trucks and specialized motor vehicles for five years.
-Deferment of VAT on machinery and equipment including trucks and specialized motor vehicles.