ZAMBIA: An Introduction to General Business Law

ZAMBIA OVERVIEW  

Country Information 

The current population of Zambia is 19,050,065 as of Wednesday, October 20, 2021, based on Worldometer elaboration of the latest United Nations data.

Zambia’s population, much of it urban, is growing rapidly at 2.8% per year, partly because of high fertility, resulting in the population doubling close to every 25 years. Lusaka is the capital city. Other major cities include Kitwe, Ndola, Livingstone and Chipata.

Gross Domestic Product (GDP) 

Gross Domestic Product (GDP) estimates for the second quarter of 2021 shows that the economy grew by 8.1 percent. This represents a 13.2 percentage point increase from negative 5.1 percent recorded in the same period of 2020. The increase in the second quarter of 2021 is mainly attributed to the performance of the four industries which contributed positively to growth namely: construction (2.1 percentage points), trade (1.6 percentage points), information & communication (1.4 percentage points) and education at 1.1 percentage points. The industries with the least contributions to the second quarter growth were mining (-0.9 percentage points), water (0.0 percentage points) and other services (0.0 percentage points).

Inflation Rate 

The annual inflation rate for September 2021 decreased to 22.1 percent from 24.4 percent recorded in August 2021. This means that on average, prices of goods and services increased by 22.1 percent between September 2020 and September 2021. The decrease in the annual rate of inflation was mainly attributed to price movements in both food and non-food items.

Political System 

Zambia has a multiparty democracy. It is a unitary state headed by a President who is elected by universal suffrage for a term of five years. He chooses his cabinet from Parliament. All laws are subject to the Constitution which contains all the fundamental freedoms of a modern democracy.

Legal System 

Zambia has a mixed legal system based on English common law and customary law. Zambia has a constitution dating from 24 August 1991, amended in 2016. A constitutional referendum was held in Zambia on 11 August 2016 to vote on the amended version of the Constitution and voters were asked whether they approve of proposed amendments to the Bill of Rights and Article 79, which dictates the process of future amendments. Although 71% of voters voted in favour of the amendments, the 50% turnout threshold was not met to validate the result.

CURRENT ECONOMIC CONDITIONS AFFECTING THE LEGAL PROFESSION

Apart from Lusaka, there are ongoing projects to build new courtrooms and rehabilitate existing infrastructure. However, the situation is dire as the conditions in Petauke, a rural town in Eastern Province, illustrate. This town has only one magistrate who serves both the Petauke and Nyimba districts as a circuit court. The court spends three weeks in Petauke and travels to Nyimba for one week of every month. The size of his area of jurisdiction means that remand prisoners and suspects in police cells have to wait longer for basic procedures such as bail hearings and trial than should be the case. According to the clerk of the court, this delay has become an entrenched violation of the right to a speedy trial. Furthermore, the magistrate is employed on contract instead of on permanent and pensionable conditions of service.

The conditions that affect the legal profession include poor funding to the Judiciary, the effects of COVID-19 and also poor court infrastructure. There is inadequate court space for Judges and Magistrates throughout the country.

The worst infrastructure and conditions of service pertain to the local court level. According to an officer of the local court, there are currently 464 local courts serviced by local court justices who have no formal training. These courts handle both civil and minor criminal offences.

NEW LEGISLATION THAT WILL HAVE AN EFFECT ON CLIENTS

Zambia has enacted various pieces of legislation that provide for a safe, secure, and effective environment for the conduct and use of electronic communications. Data privacy and protection issues in Zambia are mainly regulated by the Electronic Communications and Transactions Act No. 4 of 2021 (the “ECT Act”), the Data Protection Act No. 3 of 2021 (the “Data Protection Act”), the Cyber Security and Cyber Crimes Act No. 2 of 2021 (the “CSCC Act”), and the Information and Communications Technologies Act No. 15 of 2009 (the “ICT Act”).

The foregoing Acts came into effect on 1 April 2021 following publication of the Commencement Orders in the Government Gazette. The stated legislation is comprehensive and provides for legal requirements for the communication of data messages, processing of personal information, recognition of authentication service providers, protection of critical databases, and domain name regulation. The legislation further has provisions that prohibit the interception of communications, the disclosure of stored communications, the unauthorised decryption of communications or release of a decryption key, and the disclosure of records or other information by the key holder. Furthermore, the legislation provides for rules relating to cyber inspections, cybercrimes, and the security of electronic communications.

The Employment Code Act (the “ECA”) was enacted on 11 April 2019 and came into force on 9 May 2019. The ECA provides for amongst other things, the employment of persons, the form and enforcement of contracts of employment, employment entitlements and other benefits, the protection of wages of employees, prohibition of discrimination at an undertaking, the protection of wages of employees, registration of employment agencies, and constitutes the Skills and Labour Advisory Committees and their functions. Further, the ECA repeals and replaces the Employment Act, the Employment (Special Provisions) Act, the Employment of Young Persons and Children Act and the Minimum Wages and Conditions of Employment Act.

With respect to public health vis-à-vis the COVID-19 global pandemic, two statutory instruments (SIs) were issued to sensitize the public on the pandemic and to help mitigate the effects of the pandemic on the public. These are the the Public Health (Notifiable Infectious Disease) (Declaration) Notice, Statutory Instrument No. 21 of 2021 (“SI 21 of 2020”) and the the Public Health (Infected Areas) (Coronavirus Disease 2019) Regulations, Statutory Instrument No. 22 of 2020 (“SI 22 of 2020”) The first, SI No. 21 of 2020, declared the Coronavirus Disease 2019 as a notifiable infectious disease in line with Section 9 of the Public Health Act, Chapter 295 of the Laws of Zambia. The second, SI No. 22 of 2020, sets out measures aimed at controlling the spread of COVID-19. This includes mandatory quarantine measures for patients and those suspected of suffering from COVID-19. However, other measures, such as restrictions on movement of people, mandatory wearing of face masks, and the prohibition of gatherings of more than 50 people. Sanitizing and hand washing guidelines were also issued as a presidential directive during the first national address to the nation on COVID-19 by the former President of Zambia, His Excellency Dr Edgar Chagwa Lungu on 25 March 2020.

Following the peak of the third wave, Zambia is currently in remission with positivity cases below 1%. Consequently, the government on 2 October 2021 lifted all the COVID-19 restrictions for a month (ending 2 November 2021) and further directed that bars, taverns, casinos, restaurants and nightclubs will operate normally while observing the five (5) golden rules: masking up, maintaining physical distancing, frequent handwashing with soap and water or using hand sanitizer, avoiding crowded places and staying home and seeking medical attention immediately one develops COVID-19 symptoms. The government also directed that churches and markets will operate normally while ensuring adherence to public health guidelines. It is anticipated that the lifting of restrictions will also have a positive effect on the economy..

THE LEVEL OF ACTIVITY, TRENDS AND DEVELOPMENTS IN THE LEGAL AREA

Legal Market overview in Zambia 

After 15 years of significant socio-economic progress and achieving middle-income status in 2011, Zambia’s economic performance has stalled in recent years. Between 2000 and 2014, the annual real gross domestic product (GDP) growth rate averaged 6.8%. The gross domestic product (GDP) growth rate slowed to 3.1% per annum between 2015 and 2019, mainly attributed to falling copper prices and declines in agricultural output and hydro-electric power generation due to insufficient rains, and insufficient policy adjustment to these exogenous shocks.

The COVID-19 (coronavirus) pandemic pushed into contraction an economy that was already weakened by recent persistent droughts, falling copper prices and unsustainable fiscal policies. Economic activity through Q3 of 2020 contracted by 1.7%, as declines in industry and services outweighed growth in agriculture. Mining and services suffered from lower global demand and social distancing measures earlier in the year, respectively. However, relaxation of the lockdown measures in the second half and a global pickup of copper prices helped activity to recover. Overall, the economy is estimated to have contracted by 1.2% in 2020 — the first recession for Zambia since 1998. Inflation remained in double digits throughout 2020 — averaging 15.7% — and reached a high of 22.2% in February 2021.

A gradual recovery is expected, with GDP growth projected at 1.8% in 2021, and will average 2.8% over 2021-23. Higher copper prices, the commissioning of a new hydropower station, and a return to normal rainfall patterns are expected to support growth in agriculture and electricity production, key contributors to Zambia’s industry and service sectors. However, the impact of COVID-19 will continue to dampen activity, especially in tourism and retail and wholesale trade.

The risks to this outlook are balanced. Timely achievement of macroeconomic stability will largely depend on progress on debt restructuring, fiscal consolidation efforts and the availability of the COVID-19 vaccines. A prolonged fallout from COVID-19 could amplify fiscal and domestic liquidity challenges and lengthen the time for Zambia to embark on key macroeconomic and structural reforms. Rainfall variability remains a key structural risk to Zambia’s sustainable growth, affecting key sectors like agriculture and electricity, and highlights the need to incorporate climate-smart solutions in Zambia’s long-term growth strategy.

The Road Development Agency (RDA) said in June this year that work on the Lusaka—Ndola road would only resume once the debt situation improves in the country or funds are sourced. The Copperbelt International Airport is another major project which was finalised in August 2021 prior to the general elections.

The recent arrival of two new global law firm brands into Zambia’s mature legal market, though still being integrated by the Law Association of Zambia, is testament to its perceived growth potential. Dentons entered in 2019 through a merger with Eric Silwamba, Jalasi and Linyama Legal Practitioners, while Andersen Global moved in through a collaboration agreement with Mulenga Mundashi Legal Practitioners. Zambia’s compact legal market is comprised of both sophisticated full-service law firms and smaller more niche outfits, with the latter usually noted for their specialist litigation expertise. Among the most well-established international facing firms, Corpus Legal Practitioners (a member of the LEX Africa Network), Chibesakunda & Co (a member of the DLA Africa alliance), and Musa Dudhia & Company (a member of the ALN legal alliance) are regularly sought after for their transactional and cross-border capability. For contentious work, Corpus Legal Practitioners, ECB Legal Practitioners, Mulenga Mundashi Legal Practitioners and Eric Silwamba, Jalasi and Linyama Legal Practitioners are highly regarded. Although largely centred in the country’s capital Lusaka, some firms are headquartered in Kitwe, which is the base for several mining operations.