Agricultural Sector/Agro Processing

Overview
Zambia has a total land area of 75 million hectares (752,000 square Km), of which 58 % (42 million hectares) is classified as medium to high potential for agricultural production. Despite this huge potential, only an estimated 15 % of the total agricultural land is currently being utilized. The country experiences rainfall ranging between 800 mm to 1,400 mm annually and suitable for the production of a broad range of crops, fish, and livestock. Zambia has the best surface and underground water resources in Southern Africa, with many rivers, lakes, and dams. This, with the addition of high potential underground water aquifers in many areas, offers excellent prospects for irrigation programmes. However, these water bodies are largely unexploited. Of the country’s irrigation potential conservatively estimated at 423,000 hectares, only about 50,000 hectares are currently irrigated.

Investment Opportunities in the Agricultural Sector

In order to take advantage of this potential, the Government has embarked on the development of the following farm blocks among other strategies:


Investors are therefore invited to consider investing in the agricultural sector and can in this regard identify the farm block which would be best suited for production of crops of their choice.

However, Government realizes that agriculture alone is not enough to bring about meaningful development to the Zambian people and therefore recognizes the need to diversify from primary agriculture into agro processing. The agro processing sector in Zambia generally is one of the most important sectors that have experienced unprecedented growth in terms of production and export performance in recent years. This has been closely attributed to huge investment inflows in the various value chains as well as the enabling business environment.

Agro processing investment opportunities in Zambia include, but are not limited to the following:

• Peanut butter production;
• Cashew nut processing;
• Animal or Stock feed production(soya beans);
• Cassava Processing (food and other industrial products);
• Grain Milling (Rice, Maize, Wheat etc.);
• Edible oil Production;
• Fruit Canning and Juice Extraction;
• Meat, dairy, leather and leather products;
• Fish canning and fish meal production;
• Cotton Spinning and Textiles;
• Bio-diesel production and ethanol production; and
• Honey processing.

Tax Incentives
In addition to the tax incentives offered by the Zambia Development Agency to investors who meet the requirements, investors in the Agricultural sector are entitled to the following general tax incentives:

1) Guaranteed input tax claim for four years prior to commencement of production for Vatable agricultural businesses;
2) Zero rating agricultural products and supplies when exported;
3) VAT deferment on importation of some agricultural equipment and machinery;
4) Income tax at reduced rate of 10%;
5) Farm improvement allowance at 100% on fencing, brick or stone wall and an allowance of K10 million for farm occupied by farm workers;
6) Farm works allowance at 100% for the full cost of stumping and clearing, works for prevention of soil erosion, boreholes, wells, aerial and geophysical surveys and water conservation;
7) Dividends paid out of farming profit are exempt from tax for the first five years the distributing company commences farming;
8) Development allowance is given for any entity who incurs expenditure on the growing of tea, coffee, banana plants and citrus trees or similar plants or trees. An allowance of 10% of such expenditure shall be deducted in ascertaining the gains and profits of that business; and
9) No Import Duty on irrigation equipment and reduced Duty Rates on imports of other farming equipment.