20/02/2026
The cost of doing business in Zambia is relatively high, and that affects both small and large enterprises.
Here are some key factors:
1. Value Added Tax (VAT) – 16%
Value Added Tax Act provides for VAT at 16% on most goods and services.
Businesses must charge VAT and remit it to the Zambia Revenue Authority (ZRA).
Delays in VAT refunds (especially for suppliers) can affect cash flow.
Consumers ultimately bear the cost, making goods expensive.
2. Bank Charges
Commercial banks in Zambia charge:
Monthly account maintenance fees
Transaction charges
High interest rates on loans
SMS and withdrawal fees
Since Zambia has limited banking competition in some districts (like rural areas), charges remain high.
Access to affordable credit is a major challenge for SMEs.
3. Electricity & Fuel Costs
Load shedding affects productivity.
Fuel price adjustments increase transport and production costs.
4. Compliance Costs
Businesses must comply with:
ZRA requirements
NAPSA contributions
Local council levies
Business levy and trading licenses
Each of these adds to operational expenses.
5. Exchange Rate & Import Costs
Because Zambia imports many finished goods and raw materials, exchange rate fluctuations increase costs of doing business.
The Impact
Prices of goods and services rise
Reduced competitiveness
Informal businesses increase
Investors may hesitate
Possible Solutions
Broaden the tax base instead of increasing rates
Reduce lending interest rates
Improve infrastructure (power, roads)
Encourage local production
High business costs eventually affect household income.
