ZAMBIA: MEASURES TO SUPPORT THE AGRICULTURAL AND AGRO-PROCESSING SECTORS

By Bwalya Chilufya-Musonda,Joshua Mwamulima Thursday, November 11, 2021
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The Government has announced a series of support measures aimed at opening market access, developing value chains, enhancing mechanization, and mitigating effects of climate change in the agriculture sector.

The agriculture sector employs over half of the workforce, although its contribution to GDP has gradually declined to just 2.7% by 2020. Nonetheless, agriculture has been identified as the best opportunity to attain economic growth and diversify Zambia’s economy.

The sector faces challenges ranging from low productivity levels, insufficient agricultural support infrastructure, inadequate delivery of extension services, inadequate value addition, high cost of finance and dependence on rain fed agriculture.

To promote large scale estate production for both domestic and export markets, the Government has proposed to zero-rate value added tax (VAT) on the following selected agricultural capital equipment and accessories:

  • Manure spreaders;
  • Balers;
  • Combine harvesters;
  • Commercial sprinkler irrigation systems;
  • Animal feed grinder-mixers;
  • Pelleting machines;
  • Sprayers;
  • Trailers of a specific HS code; and
  • Dryers for agricultural products of a specific HS code.

The Government has also committed to providing the necessary infrastructure for farm blocks and completing and operationalising the ongoing irrigation infrastructure projects.

Further, as part of the agriculture mechanisation initiative, the Government indicated that it would mobilise highly concessional financing for irrigation equipment for small-scale farmers.

Other measures include the extension of the suspension of customs duty on the importation of refrigerated trucks for agro-processing to December 2022 and the removal of the 10% export duty on maize which became effective 1 November 2021. This is aimed at stimulating maize production and enhancing the competitiveness of maize exports.

Relief proposals have also been extended to the livestock subsector, particularly the removal the 5% customs duty on importation of cattle breeding stock, and the suspension of the 5% customs duty on grandparent and/or parent stock of day-old chicks when imported by a breeding company, for a period of 12 months.

These initiatives could guarantee significant improvements in the lives of most Zambians in the long term – in the form of direct and indirect employment, business opportunities, out grower schemes and foreign exchange.