92375 COUNTRY HIGHLIGHTS ZAMBIA 2013 The World Bank interviewed a representative sample of the private sector, composed of 720 establishments, between December 2012 and February 2014. The Enterprise Survey covers several aspects of the business environment as well as performance measures for each firm. Below are the main highlights from the survey. Annual sales and employment growth have slowed down over time With a real annual sales growth of 11% between 2010 25 and 2012, firms in Zambia grew at a slower rate compared to 20% annual growth during the period 20 2005-2007. Despite this deterioration, Zambian firms still exhibit higher annual sales growth compared to 15 Percentage the average for all countries with ES data (8%). Employment growth rate also declined during the 10 same period. Firms in Zambia created jobs at an annual rate of 2% between 2010 and 2012. This is 2013 ZAMBIA ENTERPRISE SURVEY 5 remarkably lower when compared with the growth rate in 2005-2007 (6%) and with the employment 0 growth rate elsewhere (6%). Real annual sales growth (%) Annual employment growth (%) Zambia2013 Zambia2007 All countries Firms are less integrated into the global economy 90 The percentage of firms in Zambia that export, 80 directly or indirectly, is slightly lower than six years 70 ago. In 2012, 12% of firms in Zambia exported at 60 least 1% of their sales compared to 15% in 2007. In Percentage 50 addition, the proportion of sales that is exported Percentage directly also decreased, from 4% in 2007 to 2% in 40 Percentage 2012. The percentage of firms that use inputs of 30 foreign origin has also declined since 2007 (49% in 20 2012 vs. 84% in 2007). Despite this negative trend 10 and despite lower integration compared to the 0 Percent of firms exporting directly or Percent of firms using material inputs average of all countries with ES data, Zambia is still indirectly (at least 1% of sales) and/or supplies of foreign origin performing as well as other landlocked countries. Zambia2013 Zambia2007 All countries Firms also report use financing services at lower levels The usage of financial services is becoming less 40 common for firms in Zambia. The percentage of firms 35 with a checking or saving account decreased from 95% 30 in 2007 to 86% in 2012. The usage of bank financing 25 Percentage Days Percentage also shows a downward trend. Only 9% of firms have a 20 bank loan or line of credit, a proportion which is less 15 than half compared to 2007 (16%) and only one forth 10 the average for all countries with ES data (35%). Moreover, only 10% of firms use banks to finance 5 working capital, vs. 15% in 2007, and only 12% of firms 0 Percent of firms using Percent of firms using Percent of firms with a use banks to finance investments in 2012; both figures banks to finance banks to finance bank loan/line of credit are lower [Type compared to the averages for all countries with text] investments working capital Zambia2013 Zambia2007 All countries ES data at 31% and 26%, respectively. The level of corruption is comparable to other countries but it is steadily increasing One ଖ On O average, firms fi i Zambia in Z bi are solicited li i d f for b ib bribe Bribery Incidence 18 25 payments or informal gifts as frequently as in other 16 countries with ES data. In 2012, 16% of the firms in n 14 20 Zambia experienced at least one payment request t Percentage across 6 transactions dealing with utilities access, , 12 Percentage 15 h permits, licenses, and taxes (17% in all countries with 10 ES data). This measure, known as Bribery Incidence, 8 10 almost doubled in Zambia between 2007 and 2012 6 (from 7% to 12%). The Bribery Incidence varies 4 5 significantly across location, with firms in Lusaka 2 being exposed to corruption three times as much as 2013 ZAMBIA REP. ENTERPRISE SURVEY 0 0 firms elsewhere in the country. Zambia2013 Zambia2007All countries Lusaka Ndola Livingston Kitwe Female inclusion in economic activity more than doubled during the last five years The proportion of women workers in the Zambian 45 4 private sector increased from 15% in 2007 to 38% in 45 40 4 2012, slightly higher than average across all countries 40 35 3 (34%). In Zambia, small and medium firms tend to 35 hire more women workers than the large firms. Forty- 30 30 3 Percentage Percentage one percent of permanent full-time workers in small 25 25 2 firms and 34% in medium firms are women 20 20 2 compared to only 15% in large firms. In the case of 15 15 1 non-production workers, the situation is the opposite, 10 10 1 larger firms seem to provide more opportunities for 5 5 5 female employment: the proportion of permanent 0 0 0 full-time non-production workers that are women is Proportion of permanent full- Proportion of Proportion of time workers that are female permanent full-time permanent full-time 19% in small firms, 28% in medium firms and 32% in workers that are female non-production workers that are female large firms Zambia2013 Zambia2007 All countries Small(5-20) Medium(20-99) Large(100+) One out of four firms in Zambia’s private sector considers access to finance as the biggest obstacle The deterioration in firms’ experience in accessing financial Access to finance Informal competitors services is consistent with the change in firms’ perception of Electricity access to finance related problems. The percentage of firms Access to land Licensing and permits choosing access to finance as the most important obstacle for Tax rates their day-to-day operations increased significantly from 14% in Crime, theft and disorder Poorly educated workers 2007 to 27% in 2012. Not surprisingly, given several factual Corruption indicators on access to finance presented above, access to finance Tax administration Labor regulations is currently the most commonly chosen top obstacle. The second Transport Customs & trade regulations Zambia2013 most important obstacle to operations reported by firms in Zambia2007 Political instability Zambia is practices of informal competitors, followed by Courts electricity and access to land. 0% 5% 10% 15% 20% 25% 30% Percentage of firms The Enterprise Analysis Unit is a joint World Bank and IFC team of economists and survey experts specialized in private sector development. Surveys implemented by the team reveal what businesses and firms experience across the world by interviewing representative samples of the formal, non-agricultural, non-extractive, private sector with 5 employees or more. The resulting globally comparable firm-level data is used to construct business environment indicators and measure firm performance. The findings and recommendations help policy makers identify, prioritize, and implement policy reforms that support efficient private economic activity. For more information on the survey visit http://www.enterprisesurveys.org Generated using Enterprise Survey data as of Sep10, 2014