In Conversation … with Kayula Siame, PS Ministry of Commerce, Trade and Industry

I recently met with Mrs Kayula Siame, Permanent Secretary in the Ministry of Commerce, Trade and Industry, to discuss industrial policy, promising sectors of the Zambian economy, and entrepreneurship. This is an abridged version of our conversation:

When you were appointed, you said that your policy priorities would be ‘industrialisation’ and ‘job creation’. How have you been implementing this vision since then?
There are several ways we as a ministry have been achieving this vision. We have a framework which provides the overall policy direction, and the sectors we’re looking at. One of the things we have done, and are still doing, is completing an industrial policy that we want to ensure can support the overall industrialisation strategy. What we had previously was one policy which covered three areas – Commercial, Trade, and Industry. We have since separated it into three areas which will stand alone. We believe this will give us more impetus as we move forward. We’ve also looked at other aspects of industrialisation that we need to zero into, in terms of sectors. One of the sectors we are looking at is the engineering sector, so through the Citizens’ Economic Empowerment Commission (CEEC), we have received some funds through the African Development Bank, so we are setting up what we’re calling industrial yards in the provinces of Zambia, and this will help the light engineering sector, for people to have a place where they can work tools, and also shared facilities for them to be able to undertake other related activities.

Is the Industrial Development Corporation (IDC) right at the centre of this industrialisation policy?
Industrial policy is driven by the Ministry of Commerce. We’re doing the industrial policy. The IDC is a government body that’s supposed to mainly look at the parastatals, and ensure that they can contribute to industrialisation by becoming more efficient, and more commercially viable. The IDC derives its policy from the industrial policy and from the Ministry of Commerce.

You mentioned the light engineering sector – what other sectors of the economy provide the greatest promise, in your view?
Well, I think there are about three. First, agro-processing. If you look at value-addition to the food we grow, the different crops, vegetables, fruits, and so on, we believe that agro-processing is very critical. If you look at the value chain, it provides quite a number of jobs from the farmers who are producing, and then the processors, and then the distributors, and of course, overall, into the market. Second, we have also identified the tourism sector, and third the pharmaceutical sector. These three sectors are mirroring what we’re doing at the SADC [Southern African Development Community] level where we also have a region-wide industrialisation strategy. And then, of course, there’s talk of mineral beneficiation. When we talk of diversifying the minerals sector, we often focus on copper. But there are other minerals that we can add value to, so those are the ones that we’re also concentrating on.

All this talk of diversification – why do you think we haven’t done all this up to now?
Well, that’s a good question we’ve been asking ourselves because we’ve talked of diversification since 1964 – more than 50 years! Well, I guess there are a number of factors. One could be that because we’re still very dependent on copper, moving away from that has been a slow process. It’s one that requires a lot of effort from the different arms of government, the different ministries, and the different sectors – they all need to think alike. I think our 7th National Development Plan, which takes a more integrated approach to development, will facilitate that because most of the time you have ministries doing their own thing and not really having a platform from which to work together.

What are some of the challenges you’ve experienced in trying to drive this change, and what are some of the challenges you anticipate?
Well, some of the challenges of course are on the policy and legal level, but those are easy to change. And then there are others which are a bit more difficult – for example, the ones dealing with skills development mainly because they are long term. And then you need to have the financing, which is the biggest challenge because to industrialise, you need to invest financially in the change, you need to pour money into new sectors, new industries, and so on and so forth. How to finance the industrialisation drive has been the biggest challenge because government doesn’t have sufficient resources to do that, so it’s meant that we’ve had to seek private sector buy-in. We’ve said ‘Look! As an economy, we’ve said it is the private sector who will drive it, so government is only creating the environment and the policies, but the actual implementation has to be done by the private sector.’ It is the private sector who will create the jobs, not government. So getting that full understanding with the private sector, so that they see that they have a very prominent role to play, has been a bit of a challenge because everyone just says, ‘No, what is government doing, what is government doing?’, but it has to be done in partnership.

Can you give me one or two examples where you’re trying to encourage the private sector to see that they have a part to play in this industrialisation process?
Well, if you look at the sub-sectors within the overall industrialisation strategy, government developed a strategy for the leather sector and said to the private sector, ‘Look, this is what we feel should be put in place, and this is how we should move forward together.’ So, government did its part now it’s up to the businesses in the leather industry to look and see how, within the overall strategy, they can move on from leather products and rawhide into creating shoes and other finished products. At times, some business people have said, ‘We want to increase shoe production, but we don’t have the funds to do it, so where do we get the money?’ And we have said ‘Right, where are the available funds? We have the Citizens’ Economic Empowerment Commission, but what we have there is not enough.’ Then they might say, ‘what about other finance institutions that can provide financing?’ Then some will say, ‘I have the shoes but I don’t know where to sell them; I don’t have a market,’ then we’ll say, ‘Fine, what we need to do is ensure that we have a market within COMESA [the Common Market for Eastern and Southern Africa]’, and now we’re talking about the East and Southern African Tripartite Free Trade Area – about 26 countries – where we will have a market, so we’re looking at that side of things so that once the shoes are done, if the production capacity is more than what’s required in Zambia, then they can export. And then at the same time, there are others who will say, ‘I have the shoes, but the quality is not to a very high standard,’ then that’s when we bring our other institutions like the Zambia Bureau of Standards that looks at quality, and so on, to help them move forward. Also, we bring in other institutions like the Leather Institute based in Ethiopia for technical assistance and technical support so they can look at the product design right through to the time it’s ready to sell.

We talk about SMEs as the drivers of future economic growth. But we can’t ignore the informal sector. What ideas do you have about how we formalise the informal sector?
Yes, we’ve had a discussion with UNDP [the United Nations Development Program] and set about examining who the people in the informal sector actually are, because very often we talk about them without knowing who they are. We agreed that we would set up a simplified registration system – as a pilot – to register them. We’ll be doing this in Livingstone and Lusaka to get to know them, to have a database, and then through that database, be able to say why are they in the informal sector, what they sell, why they sell what they sell, and then try and seek how to move towards being formalised. With PACRA [the Patents and Companies Registration Agency] we have also tried to simplify the registration process so that those who can do it on their own will automatically go there and register their businesses.

In your view, what three things do Zambians need to do to harness the commercial opportunities that exist in the country?
I think first of all we need to understand and agree that the opportunities are there in Zambia, and not concentrate on the foreigners who come and see those opportunities. So instead of spending our energy saying, ‘why are these people coming, they shouldn’t come’, the question should be, ‘where are the opportunities and how can we utilise them?’ For us as a Ministry of Commerce, when you talk of entrepreneurship and so on, we are the starting point for all that, so we believe that potential entrepreneurs and investors should come to us and find out where some of the opportunities are. We have the Zambia Development Agency (ZDA) that looks at various opportunities and is able to identify where those opportunities are. The ZDA also has a registration process with Small and Medium Enterprises for registration purposes, so to assist and provide some of the support that is required. So, I believe if we could do that, I think it would help. I think secondly also, we need to be more positive. I think we need a change of attitude. For me I think, it’s the biggest thing. We need to change our mindsets and our attitudes in terms of the way we approach things and start to believe in ourselves, so that we can start businesses and we ourselves can also make the money, and be our own producers and employers, because I think most of the time a lot of people don’t really believe in these things, so some of it is an attitude mindset that needs to be looked at. Also, people need to have the patience because most want to get into business today, make 100% profit the very next day, but it doesn’t happen because it takes time to grow your business.

Author:
Chipo Muwowo is a freelance journalist writing about economics and business investment in Southern Africa, focusing specifically on Zambia. 

 

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13 Things I Learned About Small & Medium Enterprises in Zambia

By Chipo Muwowo

I spent last week in Zambia’s capital, Lusaka, carrying out research for a magazine piece I’m writing on the state of SME (Small and Medium Enterprises) funding in the country – the challenges, opportunities, and subtleties. I conducted a series of interviews, and enjoyed numerous off-the-cuff conversations. Here are 13 things I learned:

1. The opportunity for strong returns on investment in Zambia is huge. As one interviewee said: “Where aren’t there opportunities?”

2. The potential to have a strong social impact is also massive. Whatever industry you choose to enter, you’ll quickly spot ways in which business can uplift people’s lives.

3. If one is building a business for growth/scale, the opportunity to establish and/or drive a whole industry forward is significant.

4. The emerging tech industry needs to solve local problems and not get sucked into Silicon Valley’s “an app for everything” culture, which often tries to solve problems people aren’t really facing.

5. For venture capital (VC) and private equity (PE) investors, it’s not actually that easy to identify solid local businesses to invest in. 

6. Type of SME funding is just as important as the funding itself. No one-size-fits-all.

7. Mindsets need to change. Zambians need to start creating businesses that look beyond survival. The country needs homegrown businesses that last and have scale.

8. Upcoming businessmen and women are in desperate need of mentors. On the other hand, a lot of mentors need to be guided on how to mentor.

9. The country needs people of goodwill (Zambians and non-Zambians, but especially Zambians) to return with their global training and expertise.

10. If a company is seeking VC/PE investment, Zambia probably won’t be a big enough market. Such investors seek aggressive growth so these businesses will need to look out to regional markets like SADC and COMESA. However, such growth will take time. (see point 7)

11. Government policymaking needs to look beyond the election cycle and the country’s current over-reliance on multinationals. Neither are sustainable in the long-run. One interviewee told me that currently, 240 multinationals generate 80% of the country’s GDP. That’s staggering. Zambians don’t own their economy. 

12. SMEs (especially in the manufacturing sector) are not being given the space to breathe. They need similar benefits to multinationals (e.g. tax holidays, etc) to begin to grow.

13. The informal sector problem (“How do we formalise the informal sector and generate tax revenues from it?”) is unlikely to be resolved anytime soon because it’s primarily a political issue. Those in the informal sector are many and they are voters.

I had formal interviews with:
– Mafipe Chunga, Senior Manager, Deal Advisory, KPMG Zambia
– Lukonga Lindunda and Simunza Muyangana, Co-Directors, Bongo Hive (tech hub)
– Kayula Siame, Permanent Secretary, Ministry of Commerce Trade and Industry
– Tembwe Mutungu, Partner, Oakfield Holdings (majority shareholder in Yalelo Fisheries)
– Noel Nkoma, CEO and Founder, Betternow Finance Company 
– Monica Musonda, CEO and Founder, Java Foods

Author:
Chipo Muwowo is a freelance journalist writing about economics and business investment in Southern Africa, focusing specifically on Zambia.  

LUNGU-NOMICS: Zambia’s Post-Election Economy (by Hjoe Moono)

By Hjoe Moono, Secretary of the Economics Association of Zambia

History has been made once again in Zambia. Since Frederick Chiluba, President Elect H.E. Edgar Chagwa Lungu is the only president to be elected by a vote of over 50%. Marginal as 50.3% might seem, it speaks volumes, and indeed, congratulations are in order to the Head of State and his party, the ruling Patriotic Front. Continue reading “LUNGU-NOMICS: Zambia’s Post-Election Economy (by Hjoe Moono)”

The Zambian “Afro chic” industry: A socio-economic perspective

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Muchanga Mudenda, co-owner of VALA Fashion House, Lusaka, Zambia.

As I pushed the shop door open, the bell chimed announcing to the duty staff that customers had arrived. The three of us – my sister Tawonga, my now wife Emily, and I – entered and briefly waited for someone to appear.

Continue reading “The Zambian “Afro chic” industry: A socio-economic perspective”