annual report 2017 - ceec.org.zm · | annual report 2017 ii 1. chairperson’s foreword t he...

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ü jobs created reach 27,504ü reservation schemes start comingü industrial yards take off

ANNUAL REPORT 2017

| ANNUAL REPORT 2017

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CITIZENS ECONOMIC EMPOWERMENT COMMISSION |

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CONTENTS 1. CHAIRPERSON’S FOREWORD .................................................................................................... ii

2. DIRECTOR GENERAL’S OVERVIEW .......................................................................................... V

3. INTRODUCTION ...............................................................................................................................1

4. THE CITIZENS ECONOMIC EMPOWERMENT COMMISSION..............................................2

5. VISION, MISSION STATEMENT AND CORE VALUES ..............................................................2

6. 2017 PROGRAMME PERFORMANCE OVERVIEW ...................................................................2

7. SUCCESS STORIES ........................................................................................................................9

7.1 ResouRce Mobilization ..................................................................................................................9

7.2 DistRict Value chain DeVelopMent ...............................................................................................9

7.3 ReseRVation scheMes ..................................................................................................................19

7.4 suppoRtiVe cultuRe – MinDset ....................................................................................................20

7.5 tRaDe shows...............................................................................................................................20

7.6 inDustRial YaRDs .........................................................................................................................22

8. KEY CHALLENGES ........................................................................................................................23

9. 2018 OUTLOOK ...............................................................................................................................23

9.1 Value chain DeVelopMent ..............................................................................................23

10. FINANCIAL REPORT .....................................................................................................................24

11. EXTERNAL AUDIT OF THE FINANCIAL STATEMENTS ........................................................26

11.1 auDit oF the 2010, 2011 anD 2012 Financial stateMents ....................................26

11.2 eXteRnal auDit oF ceec Financial stateMents .....................................................26


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1. CHAIRPERSON’S FOREWORD

The Commission was established through CEE Act Number 9 of 2006 with a mandate to promote broad-based economic

empowerment for targeted citizens.

I am very pleased to report that the Commission has made significant strides in fulfilling its mandate. The strategy being embarked on by the Commission is arguably the most significant and most broad-based economic empowerment programme being implemented by Government. We are leaving no stone unturned to ensure that Zambians in all districts of the country not only fully participate and benefit from, but also that they eventually take the lead in the industrial transformation of our country.

The reform process we launched in 2013 has scored notable successes in the following key areas:

1) Disbursed more than K120 million to 1,800 empowerment projects throughout the country, creating 25,000 jobs in addition to the 2,000 jobs that had been created in the five years preceding the reforms

2) Handed over all cases of misappropriation, misapplication and corruption at CEEC cited in the Forensic Audit Report of 2012 to appropriate investigative wings of Government.

3) Enhanced geographic equity by allocating 92% of the 1,800 empowerment projects approved by the Commission since 2013 to rural areas.

4) Allocated 69% of the 1,800 empowerment projects approved by the Commission since 2013 to women and youth.

5) More than doubled the loan repayment rate from 21.6% in 2013 to 52% by the end of 2017 on course to attain the target of 80% loan repayment by 2021.

6) Submitted fourteen areas of commerce, trade and industry to the Ministry of Commerce, Trade and Industry for possible reservation for targeted citizens under-pinning the signing into law of Statutory Instrument No. 1 of 2017 (Reservation Scheme in Poultry and Domestic Haulage) by His Excellency the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu , with more to follow in 2018.

The CEEC programme is beginning to show promising successes and is rapidly bringing citizen-driven industrialization to the rural areas. The Commission has now become the leading arm of Government in rural industrialization. Examples of medium scale manufacturing plants that are either operational or under installation include the following; mango juice processing in Mongu, water-bottling in Zimba, industrial starch production from cassava in Solwezi, palm oil production in Mwense, stock feed production in Kasama, maize milling in Nakonde, rice processing in Chama, stock feed manufacturing in Chipata, peanut butter production in Mungwi and Petauke, and cotton ginning in Mumbwa.

To empower Zambians in the livestock sector, the Dairy Value Chain Development Programme has been rolled out to Southern, Muchinga, Northwestern and Copperbelt provinces, while Southern Province has also benefited from successful implementation of Beef Value Chain projects such as feedlots in Namwala District.

Other success stories have included support to fish farming in Siavonga, Chavuma, Chitambo and Mpulungu Districts. Support to the tourism


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projects continues to be very strong in Southern Province particularly in Livingstone and Choma Districts, while full loan repayments were registered for four leading lodges in Livingstone, Kabwe, Mkushi and Chipata Districts.

In the energy sector, the Commission extended support to the establishment of new filling stations in Chirundu, Zambezi and Shiwangandu Districts, while an aviation fuel supply project based in Mfuwe District successfully completed full loan repayment to CEEC.

In terms of the Industrial Yards, considerable work was undertaken in 2017 such that we are on course for construction to commence on April 1 2018 in Solwezi, Mongu, Kasma, Chipata, Kitwe and Ndola while construction of the Mansa and Lusaka Industrial Yards is expected to commence on 1st August 2018.

Of course these early successes have not come without challenges. Challenges, such as very low levels of empowerment and operational funding to the Commission, without which even more could have and can be achieved. Nevertheless the conviction of the Commission is that tangible

progress must continue to be made on the ground notwithstanding the challenges. This is the least our people deserve, especially in rural areas, given the so many years of waiting after independence.

I am therefore extremely grateful for the unflinching commitment of the Board and Management of the Commission leading to the good results of 2017 inspite of the many challenges, as well as to the Ministry of Commerce, Trade and Industry for its positive facilitative role. I extend special thanks to the Zambian people for their ever-increasing engagement and cooperation with the Commission.

Kasuka Mutukwa (PhD)Chairperson

CITIZENS ECONOMIC EMPOWERMENT COMMISSION


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THE BOARD MEMBERS

Dr. Kasuka Mutukwa (PhD)Chairman

Prof. Hellicy C. NgambiVice Chairperson

Likando Kalaluka, SC.Attorney General, Commissioner

Fredson YambaSecretary to Treasury, Commissioner

Barnaby MulengaPermanent Secretary

Ministry of Labour and Social Services

Commissioner

Kayula SiamePermanent Secretary Of Commerce,

Trade and Industry Commissioner

Mercy SiameHuman Resource Management Specialist

Commissioner


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2. DIRECTOR GENERAL’S OVERVIEW

The Year 2017 being the first Year of the 2017-2021 Strategic Plan gave the Commission an opportunity to build on the gains of the 2013-2016 Strategy implementation, with a goal to continue re-positioning the role of the indigenous majority in the Zambian economy in terms of increasing their level and share of ownership in business and enterprise and in terms of their ability to take the lead in the transformation of the economy into a more competitive, diversified, value adding one. To that end, we continued to show strong performance in all our four (4) Strategic Objectives.

Under Strategic Objective 1: More Conducive Policies, Laws & Regulations, His Excellency the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu, signed into law Statutory Instrument Number 1 of 2017 Reservation Scheme in Poultry (Sale of Live Birds) and Domestic Haulage. The Commission submitted recommendations to the Ministry of Commerce, Trade and Industry for a reservation scheme in the Cleaning Industry. The number of targeted companies issued with preferential certification increased to exceed 11,000 in total.

Towards the construction of industrial Yards and creating an enabling environment for commercialization of cassava, and with ZMW 300 million resources mobilized from the African Development Bank (AfDB) he Commission

commenced operations under the Skills Development and Entrepreneurship Project – Supporting Women and Youth. Land was secured for construction of the Yards in Mongu, Solwezi, Mansa, Kasama, Kitwe, Ndola, Lusaka, and Chipata Districts and the architectural and engineering drawings for construction of the Yards was completed. The Department of Cooperatives and the Zambia Agriculture Research Institute were subcontracted to support the implementation of the Cassava Commercialization Initiative in Northern, Luapula and Northwestern Provinces.

Under Strategic Objective 2: Improved Business Development Services (BDS), we provided business plan development support to all clients that were funded under the Citizens Economic Empowerment Fund. The Commission created a Technology Evaluation Committee including CEEC, Technology Advisory Unit (TDAU), and National Technology Business Centre (NTBC), National Institute for Industrial and Scientific Research (NIISR), Zambia Bureau of Standards (ZABS) and Zambia Institute of Architects with a mandate to support increased productivity and quality assurance in CEEC funded projects. The Committee successfully executed its first assignment of evaluating 47 cassava processing projects leading to improved business plans.

Under Strategic Objective 3: Increased Access to Finance, we supported the creation of 2,760 new jobs along various value chains, bringing the total number of jobs created through CEEC since 2008 to 27, 504.

Under Strategic Objective 4: Increased Access to Competitive Markets, we facilitated 14 formal supply agreements for targeted MSMEs, predominantly with supermarkets.

Likando MukumbutaDirector General

CITIZENS ECONOMIC EMPOWERMENT COMMISSION


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EXECUTIVE TEAM

Likando MukumbutaDirector General

Nchimunya MondeDirector

MSME Business Development

Edna MwansaDirector

Legal Services

Christopher SichingaDirector Finance

Arthur LuywaActing Director

Credit Control & Risk Management

Merenia NkololaActing Director

Corporate Services


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3. INTRODUCTION

in local and regional markets. 100% of CEEC manufacturing clients will be undergoing training provided by the Zambia Bureau of Standards (ZABS) by 2019 as well as implementation of Kaizen by 2019.

Strategic Objective (SO)-3 Increased Access to Finance continues to promote CEEC’s innovative finance and capital options for MSMEs. The 2017-2021 strategy will see more recourse to other financing instruments, such as guarantees, matching grants, capital market options, unit trusts, joint ventures, venture capital, trade finance, syndicating, etc. deployed to finance CEEC clients. SO3 is aimed at opening up greater participation in the economy by targeted companies encompassing all three categories of enterprise: micro, small and medium scale.Strategic Objective (SO)-4 Increased Access To Competitive Markets focuses on market research and market development work aimed at helping targeted citizens take fuller advantage of bi-lateral and multilateral trade agreements within Africa to boost their markets and sales, such as the bilateral agreements with Democratic Republic of Congo and with Angola, as well the SADC, COMESA and the Tripartite Free Trade Area Agreements. Other work includes strategies and interventions to help the MSMEs import-substitute within the domestic scaled markets such as supermarket chains and shopping malls.

This Report provides the status of implementation of the 2017 Annual Work Plan addressing policy, legislative and

regulatory reform to foster an environment that is more conducive to the economic empowerment of targeted citizens, business development services delivery for targeted citizens venturing into business, access to finance, and the need for targeted citizens to penetrate scaled local markets.

Under the 2017-2021 Strategic Plan, the Commission is enhancing the economic empowerment of targeted citizens through a Results Framework of four (4) Strategic Objectives that are guiding planning, management and performance assessment. These are:

Strategic Objective (SO)-1: More Conducive Policies, Laws & Regulations is aimed at enhancing the policy, legal and regulatory framework for economic empowerment in Zambia so that the goal of increased economic participation by targeted citizens can to be achieved more comprehensively and in a timely manner.

Strategic Objective (SO)-2 Improved Business Development Services (BDS) is aimed at productivity and efficiency improvements throughout the production and marketing cycle that will result in improved Micro, Small and Medium Enterprise (MSME) competitiveness


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5. Vision, Mission Statement and Core Values

Vision

A Nation of Economically and Equitably Empowered Citizens.

Mission Statement

The Citizens Economic Empowerment Commission is a body corporate that promotes the economic empowerment of targeted citizens through ownership of productive assets, skills development, access to finance, preferential procurement and fostering business and entrepreneurial culture.

Values

• Accountability, transparency and fairness• Respect for all• Integrity• Efficiency and effectiveness• Hard work• Team and supportive spirit

4. The Citizens Economic Empowerment Commission

The Citizens Economic Empowerment Commission (CEEC) is a body corporate established through the enactment of the Citizens Economic Empowerment Act No. 9 of 2006 to foster broad-based economic empowerment in Zambia.

Broad-based economic empowerment is defined in the Act as ‘the economic empowerment of targeted citizens, citizen influenced companies, citizen empowered companies and citizen owned companies through diverse but integrated socio-economic strategies that include ownership of productive assets and resources, increasing the levels of employment in the formal sector, increasing household incomes, expanding literacy and skills development, and ensuring preferential procurement and access to services of state institutions.

The Commission is responsible for investing and administering the Citizens Economic Empowerment Fund (CEEF), which has by law been established under Part IV of the CEE Ac No.9 of 2006. The purpose of the Fund is to support the development of broad based economic empowerment programmes and is the principal vehicle through which the Commission provides interest bearing business loans to targeted citizens.

6. 2017 Programme Performance Overview Progress towards attainment of Key Performance Indicators of programme implementation in 2017 compared to the Year before is presented in Table 1.

Table 1 CEEC Progress towards attainment of Key Performance Indicators for 2017

KP1 2016 Actual 2017 Actual Performance Comment

KPI 1: Rural share of approved empowerment projects

91.8%% 92% By the close of the year 2017 the rural share of approved projects remained at 92% same as what was recorded in 2016 because there were no new projects approved in 2017. The K15 million empowerment funds released by Treasury went towards financing some of the projects that had been approved in prior years but remained unfunded.


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Category Actual %

Women 43Youth 26Disabled 2Men 29Total 100

Category Actual %

Women 43Youth 26Disabled 2Men 29Total 100


KPI 2: Social distribution of approved projects

The 29 projects that were funded in 2017 were amongst those that has been approved in prior years but had remained unfunded. The percentages for social distribution therefore remained as was reported in 2016.

KPI 3: Jobs Created 7,288

(Cumulative 24,744)

2,760

(Cumulative 27,504)

The Commission had anticipated to establish ginneries in Lundazi and Sinazongwe which would have created 30,000 jobs as had been the case at Mumbwa Cotton Ginnery. However, as only K15 Million out of K35 Million was received from Treasury, jobs were only created through other projects which do not have the employment potential of the cotton sector.

KPI 4: Preferential Procurement Certificates Issued

1,770

(Cumulative 10,374)

1,572

(Cumulative 11,946)

The total number of Preferential Procurement Letters issued to targeted companies increased by 1,572 from 10,374 in 2016 to 11,946 in 2017.

The Commission has engaged the Zambia Public Procurement Authority to evaluate the impact of SI 36 of 2011 by determining the number and characteristics of targeted companies that have successfully secured public contracts from 2012. Based on the result of the assessment, the Commission will develop a strategy to enhance the impact of Preferential Procurement

KPI 5: Areas of Commerce, Trade and Industry (CTI) Reserved for Targeted Citizens.

1. Quarry Progress: Implementation roadmap and SI input submitted to MCTI

2. Block-making Progress: Implementation roadmap and SI input submitted to MCTI

3. Poultry Progress: Implementation roadmap and SI input submitted to MCTI

4.Domestic Haulage Progress: Implementation roadmap and SI input submitted to MCTI

1. Successfully submitted to MCTI recommendations for reservation schemes in the cleaning industry

2. SI 1 of 2017 was signed by His Excellency the President Mr. Edgar Chagwa Lungu on 1st January 2017. Following this, successfully developed recommendations on the modalities, rules and regulations for implementation of SI No. 1 of 2017 (poultry and Domestic Haulage)

The Quarry and Block Making Statutory instruments are yet to be considered. Concerns were raised about the preparedness and capacity of Zambian citizens to operate in this sector. In order to address these concerns, the Commission developed a special initiative for Block Making where Zambian citizens have been provided with loans to establish quarry as well as block making enterprises.


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KPI 6: Number of clients funded

38 29 The main cause for the under-performance was the low level of empowerment funds released by Treasury since 2014 with no funds being released in 2016 and ZMW15 million having been released in 2017 compared to the budgeted ZMW35 million, representing 43% of funding.

KPI 7: Number of clients that received business plan development support

208 68 The Commission continued providing business plan development support 100% of the projects submitted to the Board for consideration.

KPI 8: Value of funds disbursed (ZMW)

K21m

(Cumulative 276.9million)

K30.3m

(Cumulative 308.2million)

K15 million were funds received from Treasury while K15.3 million of the empowerment funds disbursed in 2017 were from loan recoveries.

KPI 9: Loan Recovery Rate

50% 52% The Loan Recovery rate continued improving Year-on-Year, reaching 52% in 2017 from 50% in 2016. The target is to reach 80% by 2021.

KPI 10: Internally Generated Revenue (ZMW)

ZMK11,564,733 K22,398,536 This relates to income realized other than grants from income from Treasury. Alternative income increased from K11.6 million in 2016 to K22.4 million in 2017. It was derived from facility fees, money market, interest earned on loan recoveries, proceeds from the AfDB Project, etc.

Figure 1 Social distribution of Approved Empowerment Projects 2012-2017

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Figure'1'Social'distribution'of'Approved'Empowerment'Projects'2012>2017'

Table 2 Total number of Additional Jobs created per Province

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0%10%20%30%40%50%60%70%

2008-12 2013 2014 2015 2016 2017Youth 12% 27% 35% 35% 26% 26%Women 23% 37% 37% 31% 43% 43%Disabled 2% 1% 2% 1% 2% 2%Men 63% 35% 26% 33% 29% 29%

Social Distribution of Approved Empowerment Projects 2012-2017

Youth Women Disabled Men

S/N Province 2016 Actual 2017 Actual Cumulative Total Q1 Q2 Q3 Q4 Total

1 Central 24,014 0 7 53 65 125 24,139

2 Copper belt 48 31 38 68 9 146 194

3 Eastern 99 5 5 19 0 29 128

4 Luapula 19 5 3 4 7 19 38

5 Lusaka 129 62 27 66 6 161 290

6 Northern 223 18 1386 96 0 1500 1,723

7 North- Western

23 35 2 29 17 83 106

8 Southern 4 12 31 15 29 87 91

9 Western 63 6 23 0 3 32 95

10 Muchinga 122 52 10 231 285 578 700

TOTAL 24,744 226 1,532 1,758 421 2,760 27504


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Table 2 Total number of Additional Jobs created per Province

S/N Province 2016 Actual 2017 Actual Cumulative Total

Q1 Q2 Q3 Q4 Total1 Central 24,014 0 7 53 65 125 24,1392 Copper belt 48 31 38 68 9 146 1943 Eastern 99 5 5 19 0 29 1284 Luapula 19 5 3 4 7 19 38

5 Lusaka 129 62 27 66 6 161 290

6 Northern 223 18 1386 96 0 1500 1,7237 North- Western 23 35 2 29 17 83 106

8 Southern 4 12 31 15 29 87 919 Western 63 6 23 0 3 32 9510 Muchinga 122 52 10 231 285 578 700

TOTAL 24,744 226 1,532 1,758 421 2,760 27504

Figure 2 CEEC Cumulative Jobs Created 2012-2017

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Figure'2'CEEC'Cumulative'Jobs'Created'2012>2017'

Figure'3'No'of'MSMEs'that'received'PP'Certification'2008'–'2017

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2012 2013 2014 2015 2016 2017Jobs 2,688 2,688 17,456 19,468 24,744 27,466

0

5,000

10,000

15,000

20,000

25,000

30,000

Jobs

CEEC'Cumulative'Jobs'Created'2012>2017

2011 2012 2013 2014 2015 2016 2017Planned!Cumulative 1,000 2,000 3,000 5,000 7,000 9,000 11,000Actual!Cumulative 184 2,010 4,342 6,569 8,604 10,374 11,946

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

No.!of!M

SMEs

No.'of'MSMEs'that'Received''PP'Certification'2008>2017''


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!

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Figure'2'CEEC'Cumulative'Jobs'Created'2012>2017'

Figure'3'No'of'MSMEs'that'received'PP'Certification'2008'–'2017

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2012 2013 2014 2015 2016 2017Jobs 2,688 2,688 17,456 19,468 24,744 27,466

0

5,000

10,000

15,000

20,000

25,000

30,000

Jobs

CEEC'Cumulative'Jobs'Created'2012>2017

2011 2012 2013 2014 2015 2016 2017Planned!Cumulative 1,000 2,000 3,000 5,000 7,000 9,000 11,000Actual!Cumulative 184 2,010 4,342 6,569 8,604 10,374 11,946

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

No.!of!M

SMEs

No.'of'MSMEs'that'Received''PP'Certification'2008>2017''

Figure 3 No of MSMEs that received PP Certification 2008 – 2017

Table 4: Reservation Scheme Process Progress Indicator

Reservation Scheme Process Progress

Target Actual

SI No.1 of 2017 (Poultry and Domestic Haulage) 5 5

Cleaning Sector Reservation Scheme 2 3

Manufacturing of Uniforms 2 2

*This is a process indicator with five stages of progress: 1. Selection; 2. Research; 3. Submission of recommendations to MCTI; 4. Cabinet Approval; and 5. Legislation. The Commission is accountable to stages 1-3.

FUNDING TO THE EMPOWERMENT FUND SINCE 2008

Year Amount Approved by Parliament (ZMW)

Amount Released by Treasury (ZMW)

(Under)/Overfunding (ZMW)

% of Released Funds

2008 150,000,000 96,181,000 (53,819,000) 64%

2009 40,000,000 40,000,000 - 100%

2010 25,000,000 22,000,000 (3,000,000) 88%

2011 40,000,000 18,000,000 (22,000,000) 45%

2012 47,000,000 25,000,000 (22,000,000) 53%

2013 53,000,000 53,000,000 - 100%

2014 57,000,000 5,000,000 (52,000,000) 9%

2015 82,000,000 10,000,000 (72,000,000) 12%

2016 187,000,000 - (187,000,000) 0%

2017 37,000,000 15,000,000 (22,000,000) 41%

Total 718,000,000 284,181,000 (433,819,000) 40%

Table 5: Empowerment Funding since 2008


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Figure 4 MSMEs funded 2008 – 2017

Figure 5 Cumulative funds disbursed 2008 – 2017

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Figure 4 MSMEs funded 2008 – 2017

2008E2009 2010 2011 2012 2013 2014 2015 2016 2017

Planned 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600 1,600Actual 0 723 723 0 8 1,156 446 38 29Planned!Cumulative 1,600 3,200 4,800 6,400 8,000 9,600 11,200 12,800 14,400Actual!Cumulative 0 723 1,446 1,446 1,454 2,610 3,056 3,094 3,123

02,0004,0006,0008,000

10,00012,00014,00016,000

No.!of!M

SMEs

No.'of'MSMEs'Funded'2008>2017''

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Figure'5'Cumulative'funds'disbursed'2008'–'2017

Table 6: Empowerment Fund Portfolio loan recovery Performance by Sub-portfolio

Year Facility Type Amount Due (K) Amount Paid (K) Repayment Rate2008-2011 Project Finance 206,405,085.00 109,983,212.00 53%

2013 Project Finance 7,651,415.09 4,079,955.10 53%2013 Micro Finance 9,549,234.24 3,432,815.54 36%2013 UNWTO 1,456,536.74 1,056,814.76 73%2014 Micro Finance 2,695,156.00 905,391.42 34%2014 Project Finance 399,308.48 183,865.35 46%

Total Weighted Average228,156,735.55 119,642,054.17 52%

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170,000,000!

190,000,000!

210,000,000!

230,000,000!

250,000,000!

270,000,000!

290,000,000!

310,000,000!

330,000,000!

2008E12 2013 2014 2015 2016 2017

Cumulative'Funds'Disbursed'2008>2017

Disbursed!Cumulative Released!!Cumulative


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Year Facility Type Amount Due (K) Amount Paid (K) Repayment Rate

2008-2011 Project Finance 206,405,085.00 109,983,212.00 53%

2013 Project Finance 7,651,415.09 4,079,955.10 53%

2013 Micro Finance 9,549,234.24 3,432,815.54 36%

2013 UNWTO 1,456,536.74 1,056,814.76 73%

2014 Micro Finance 2,695,156.00 905,391.42 34%

2014 Project Finance 399,308.48 183,865.35 46%

Total Weighted Average

228,156,735.55 119,642,054.17 52%

Table 6: Empowerment Fund Portfolio loan recovery Performance by Sub-portfolio

Figure 6 CEEC Loan Repayment 2008-

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Figure'6'CEEC'Loan'Repayment'2008>

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Table 7: Financing of The Commission’s Operational Expenditure

S/n

CEEC Financing Source

ZMW ZMW Target 2017 Actual 2017

1 Interest on loan repayments 4,800,000 5,347,994 2 Interest on bank account balances and

placements 4,600,000 446,106

3 Facility fees 2,500,000 966,671 4 Keyman Insurance Commission - 73,766 5 Insurance claims - 21,458 6 Other income 200,000 32,579 7 Ministerial Authorisation-Direct credit mgt

costs 8,500,000 6,245,527

Total 20,600,000 13,134,101

2008E12 2013 2014 2015 2016 2017Planned 0% 40% 45% 50% 55% 60%Actual 21.6% 39% 44% 55% 50% 52%

0%

10%

20%

30%

40%

50%

60%

70%

CEEC'Loan'Repayment'Rates'2008>2017

Table 7: Financing of The Commission’s Operational Expenditure

S/n

CEEC Financing Source

ZMW ZMWTarget 2017 Actual 2017

1 Interest on loan repayments 4,800,000 5,347,994 2 Interest on bank account balances and placements 4,600,000 446,106 3 Facility fees 2,500,000 966,671 4 Keyman Insurance Commission - 73,766 5 Insurance claims - 21,458 6 Other income 200,000 32,579 7 Ministerial Authorisation-Direct credit mgt costs 8,500,000 6,245,527 Total 20,600,000 13,134,101


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Figure 7: Selected Value Chains per Province

7. SUCCESS STORIES & SITE VISITS7.1 Resource MobilizationTowards the construction of Industrial Yards and creating an enabling environment for commercialization of cassava, and with ZMW 300 million resources mobilized from the African Development Bank (AfDB), he Commission commenced operations under the Skills Development and Entrepreneurship Project – Supporting Women and Youth. Land was secured for construction of the Yards in Mongu, Solwezi, Mansa, Kasama, Kitwe, Ndola, Lusaka, and Chipata Districts and the architectural and engineering drawings for construction of the Yards was completed. The Department of Cooperatives and the Zambia Agriculture Research Institute were subcontracted to support the implementation of the Cassava Commercialization Initiative in Northern, Luapula and North-Western Provinces.

7.2 District Value Chain Development

The Commission has identified and prioritized five (5) value chains in each of Zambia’s ten

(10) provinces to focus its District Value Chains development support based on the comparative advantage each province may have in terms of abundance of natural resources or agricultural output suitable to value addition investment. Figure 1 presents the selected value chains per province.

The Commission selects for each district two (2) of the five (5) Value Chains prioritized for a province in line with the comparative advantage of each district plus in consultation with representatives of the various communities. Of Zambia’s 110 districts, the Commission has since inception in 2012 to 2017 implemented the District Value Chain development in 52 districts of the country. Overall the supported value chains have been pineapple, honey, dairy, gemstones, fish, timber, cotton, soybean, rice, mango, cassava, beef, poultry, palm oil, and groundnuts.

FishPalm OilSoya BeansCassavaTourism

FishDairyGroundnutsRiceCassava

DairySoya BeansGroundnutsRiceBeef

DairySoya BeansGroundnutsCottonTourism

DairySoya BeansPoultryAquacultureBeef

DairyCottonPoultryFishSoya Beans

DairyBeefTourismFishSoya Beans

MangoBeefRiceTimberCassava

PineappleDairyRicePoultryHoney

GemstoneTimberHoneyFishDairy

NORTHWESTERN

WESTERN

SOUTHERN

LUSAKA

CENTRAL

COPPERBELT

EASTERN

MUCHINGA

LUAPULA NORTHERN


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Success stories in District Value Chain development have included the following:

7.2.1 Aquaculture

The fish subsector is designated as one of the priority value chains. Through development of fish ponds and cages in Siavonga, Chavuma, Mwandi, Kitwe, Luanshya, Ndola, Rufunsa, Mpulungu and Serenje the Commission raised investment in smallholder aquaculture to a new level in Zambia.

In Chavuma District, Beauty Muhongo was one of the youths supported with a loan amount of K99,610.00 for the construction of two 25x50m fish ponds, guard house, wire fence, supply of fingerlings and stock feed. On October 30, 2017, Beauty harvested her first pond with a yield of over 600 kilograms of table fish. The size of the fish was ranging between 350 grams to 600 grams per fish. The fish was sold at a price of K35.00 per kilogram. A marketing agreement with Chavuma Fish Centre worth K14, 000.00 was facilitated for the client.

Mpulungu District was supported under the Aquaculture Value Chain in 2013 with a total disbursement of K2,576,000.00. 20 farmers stocked their ponds with fingerlings out of which 6 farmers have since harvested an average of 1.5 tons of fish. Market Linkages were facilitated by the Commission to Kasama Nursing School, Kasama College of Education and Mpulungu Boarding School and major market places in Kasama District.

29-year old Beauty Muhongo, (in green jacket) recording her fish sales on harvest day


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Stocking of fingerlings in Mpulungu

7.2.2 Southern Province

7.2.2.1 Water Bottling Special Initiative

To increase participation of Zambian citizens in strategic industries, the Commission facilitated the operationalization of a water bottling plant in Zimba District with a disbursement of K490, 000 to Muna Aqua. The plant has a capacity of 6,000 cases per hour and 11 jobs have been created.


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Mr. Hatembo’s Water-bottling Plant in Zimba

7.2.3 Western Province

7.2.3.1 Water Bottling

The Commission facilitated the establishment of a mango juice factory by Adastra Fruit Juice Processors Ltd in Mongu District, with a production capacity of 8 metric tonnes of pulp per day, three times the capacity of the parastatal ZAMhort mango juice plant that closed in Mongu District the late 1980s. 2017 saw the launch of a water bottling line at the plant.


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7.2.4 Eastern Province

7.2.4.1 Energy Subsector

Air Mafuta Aviation Services Limited received a total funding of K1, 015, 724.00 to procure two (2) aluminum aviation fuel tanks with capacity of 28,000 litres each for storing Jet A1 fuel system and AVGAS 100LL fuel at Mfuwe Airport. The company currently employs nine (9) full time staff and has plans to extend to Chipata Airport.

Production of bottled water launched at the Adastra Plant in Mongu


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CEEC Board Chairperson (second from left) during a site visit of the Air Mafuta Project.

7.2.5 Muchinga Province

7.2.5.1 Block Making Special Initiative

To support targeted citizens in the construction industry, the Commission approved 26 competitive block-making projects distributed across all provinces of the country.


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7.2.5.2 Dairy Processing

Muchinga Dairy Limited acquired a loan from CEEC amounting to K2, 057,429.00 to procure milk processing equipment in order to establish a milk processing plant. The processing plant is expected to be operational in April 2018. The company is expected to employ 16 people during the first phase of the operation, 20 in the second phase (growth stage) of operations and over 30 in the maturity stage of the operation.

7.2.5.3 Maize Milling

The Commission has supported Nakonde Milling in Nakonde District that entered the market as the largest maize milling plant in Muchinga Province. The establishment of Nakonde Milling has contributed to a reduction of mealie meal prices in the district.

7.2.6 Central Province

7.2.6.1 Mumbwa Farmers Cotton Ginning and Pressing Company Starts Loan Repayments to CEEC

The Mumbwa Farmers Cotton Ginning and Pressing Company (MCGPCO) which was initiated in 2014 was supported further in 2016 to expand its outgrower scheme. The Commission thereby contributed greatly to the creation of more than 15,000 jobs in Mumbwa District. The Company started its loan repayments to CEEC with K3.5 million direct transfer from proceeds of lint exports to Switzerland.

A youth owned enterprise Lazarouse Kanuma General Dealers of Chinsali District, was supported to establish a block making business. The business has a total workforce of eight (8) employees.


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7.2.7 Southern Province

7.2.7.1 Dairy Animals Re-stocking

A total of 137 dairy animals were delivered to the CEEC’s dairy value chain beneficiaries in four (4) provinces namely Southern, Muchinga, Northwestern and Copperbelt. The breakdown is as shown in table 8.

Table 8: Dairy Animals Delivered per Province

PROVINCE DELIVEREDSouthern 51 N/Western 10 Muchinga 38Copperbelt 38 TOTAL 137

Promoter, Ms. Yvonne Chifwala milking her cows at her Farm in Choma


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7.2.7.2 Beef Production

The Commission has been promoting the development of the Beef Value Chain in Namwala District since 2014 where it has funded 34 projects valued at K3,115,929.86. One of the beneficiaries of this initiative is Shafro Farms, a cattle ranch with a herd of 1,700 cattle. In 2014, CEEC approved and disbursed a loan of K520,830 for the enterprise to introduce a feedlot or cattle fattening component on the Farm. The performance of the business was impressive leading to CEEC approving an additional loan amount of K1, 000,000 to expand the enterprise. The Farm produces an average of 100 fattened cattle per cycle of three (3) months thereby giving revenue of K360, 000 per quarter in addition to other revenue streams on the Farm. The Farm employs 15 workers, 6 of whom were employed following funding from CEEC.

7.2.8 Central Province

7.2.8.1 Milk Production

Mr. Gerald Ngandu of Likwabilile Farms, located in Mpima, Kabwe District successfully acquired 16 in-calf Fresian dairy cows with a K446,601.90 loan from CEEC also to cater for feed, drugs and fencing.

Part of Mr. Ngandu’s herd of 16 dairy animals acquired through CEEC

7.2.9 Northwestern Province

7.2.9.1 Milk Production

Musoleka is a Farm enterprise situated 42km north east of Solwezi Central Business District, in the Kainamfuma Farm Resettlement Scheme. The enterprise received funding amounting to K524, 000.00 for the purchase of 10 dairy cows, a refrigerated truck, construction of a kraal and milking parlor. The business is now producing around one hundred (100) liters of milk per day.

7.1.2.2 Tourism Franchise Special Initiative

In July 2014, the Commission in an effort to promote international standards among targeted citizens in the Tourism Sector supported targeted citizens to establish franchise tourism businesses under a Special Initiative. Investments considered included hotels and other lodging, restaurants, water sports, theme parks, takeaways, travel and tours, cinemas e.t.c. Under the Tourism Franchise Special Initiative, the Commission funded Linro Enterprises with a loan amount of K2, 000,000 to establish a takeaway outlet under the King Pie Franchise.


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The outlet opened for business on 30th June 2017 as Zam Pie with an initial work force of 6 employees and realized turnover of K91, 000 and K64, 000 for the months of July and August 2017 respectively.

Zam Pie opened for business in Choma

Apart from successes recorded under the Value Chain Development Programme, other success stories were recorded in creating an enabling environment for increased economic participation of citizens.

7.2.10 Northern Province

7.2.10.1 Chengelo School of Nursing

Chengelo School of Nursing obtained funding of K2,500,000 for expansion of the Nursing school to international standard. This was after fully liquidating an earlier loan of K1,200,000.

Since 2011, 277 students have graduated from Chengelo Nursing School and 90% of the graduates have been absorbed by Public health institutions and 10% have been captured by Mine health institutions on the Copperbelt.

The School has six intakes and has enrolled 220 students drawn across the country as well as neighbouring countries such as Botswana and each student pays ZMW 12,750 per semester.

37 jobs have been created.


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7.2.11 Lusaka Province

7.2.11.1 Tourism Franchising

The Tourism Franchising Initiative took off with a roar in Lusaka with the opening of CEEC supported South African Franchise Bubbles Playland . The franchize is being operated by Ms. Nora Mafwenko who was supported with a K1,700,000.00 CEEC loan for the project.

Bubbles Playland at Manda Hill Shopping Centre, Lusaka

7.3. Reservation Schemes

CEEC under the provisions of Section 21 (1) and (2) of the CEE Act No. 9 of 2006 is undertaking activities that lead to increased investment opportunities for targeted citizens, including among other measures, to identify, propose and gazette areas of commerce trade and industry to be reserved for investment by targeted citizens, citizen influenced, empowered and owned companies.

Pursuant to Section 21 of the Act, His Excellency the President, Mr. Edgar Chagwa Lungu, on 1st January 2017 signed into law Statutory Instrument (SI) Number 1 of 2017 Reservation Scheme which stipulates that;

“The sale of live birds in a market or any other place designated under written law is reserved for targeted Citizens, Citizen-Influenced Companies, Citizen-Empowered Companies and Citizen Owned Companies”.

Further, Domestic Haulage works for all public procurement works have been reserved for targeted Citizens, Citizen-Influenced, Citizen-Empowered and Citizen Owned Companies”.


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7.4. Supportive Culture – Mindset

The Commission supported, through an incubation programme, Great Minds Media Solutions (GMMS) Limited, a youth-owned and operated creative media and communications company. Great Minds Media Production were responsible for the production of the ‘Mbonge Business Reality Show’. The Grand Finale was successfully held on the 3rd of February 2017, which saw three of the finalists walk away with business loan prizes.

The Commission awarded the studio equipment acquired to produce the Mbonge Reality Show, which ended in March 2017 as a business loan to Great Minds Media Solutions in order to empower them to become a fully-fledged youth owned media business.

7.5. Trade Shows

The Commission participated at the Copperbelt Agricultural and Mining Show under the theme “Adding Value-The Home Grown Solutions” under the Ministry of Commerce, Trade and Industry One Stop Shop. The Ministry won First Prize under the Advisor and Sector Representation category.

The Commission participated at the 91st Agricultural and Commercial show under the theme “Promoting a Green Economy”. Two CEEC-supported projects - Best Beef Limited and a fish farmer from Rufunsa exhibited at the Show. Youth client, Timothy Ndlovu owner of Best Beef Limited was able to make on the spot sales of his sausages and realized ZMW1,800 at the Show. The Ministry of Commerce, Trade and Industry One Stop Shop scooped1st prize in the Best Regulator Exhibitor and 2nd prize for Best Export Promotion categories.

Best Beef Limited proprietor (left) braaing his meat products for show goers to sample


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The Embassy of the Kingdom of the Netherlands organized a trade mission for Dutch companies with interests of doing business in Zambia. The expo was held at Holland Pavillion in Chisamba from 27th to 29th April, 2017 and CEEC was invited to exhibit businesses in the poultry and dairy industries.

The Commission facilitated four (4) projects from Central and Lusaka Provinces to participate at the expo as a way of providing strategic business development support to help them improve quality and. The aim also was to link the participants to opportunities such as Innovative finance options and acquisition of new technologies in the poultry and Dairy Value Chains.

The following were the major highlights of the Expo:

� The participants held one-on-one discussions with Dutch investors. These experts explained to the farmers the new technologies and the challenges that are experienced in small scale and large scale investments.

� The farmers had an opportunity to see new innovative solutions that the outside world offers and also financial solutions for agro businesses.

� The farmers were able to visit other stands and other suppliers in dairy and poultry both local and foreign and were exposed to how other farmers conduct business for sustainability.

Pictures taken during the expo


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7.6. Industrial Yards

The Commission in 2016 leveraged K300 million five-year funding from the African Development Bank for development of seven (7) Industrial Yards in Mongu, Solwezi, Mansa, Kasama Kitwe, Ndola Districts as well as three (3) in Lusaka Province through the Skills Development and Entrepreneurship Project – Supporting Women and Youth.

The project will move Zambia to a new level of light manufacturing in metal fabrication, woodwork, auto care, agro-processing and gemstone processing and services. It will create at least 4,000 light manufacturing jobs and services, predominantly for young people.

The Project is also financing the Cassava Commercialization Initiative in Solwezi, Mansa and Kasama Districts as well as Copperbelt and Lusaka Provinces. It will transform value addition to Cassava in Zambia and create at least 12,000 jobs along the Cassava Value Chain

Business Support Centres aimed at strengthening business development services will also be established at CEEC provincial offices in Solwezi, Mansa, Kasama, Chipata, Ndola, Mongu and Lusaka. In 2017, ground-breaking was done for Mansa and Chipata Industrial Yards.

The Ngambela (Prime Minister) of the Barotse Royal Establishment hands over 50Ha of Land for the Mongu Industrial Yard to the CEEC Board Chairperson


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8. KEY CHALLENGESThe Commission continued to face the following operational constraints:

� A shortage of fingerlings negatively impacted the implementation of the Aquaculture development programme.

� MCTI issued a Ministerial Directive for the Commission to raise its loan recovery rate to 80% by 2021.The Commission remained with low ground presence at district level to adequately intensify loan recoveries.

� The Commission’s operational budget remained inadequate and not aligned to the requirements of its mandate and activities. As a result, associated operational constraints persisted.

� Low economic empowerment funding from Treasury persisted in 2017.

� Almost the entire fleet of Headquarters and field vehicles has surpassed their five years economic life. Breakdowns continued to be frequent and vehicle maintenance costs continued to rise. There is need to replace the stock of fifteen vehicles whose economic life lapsed in 2013-2014.

� The Commission in 2017 continued with historical backlog of financial liabilities that cannot be liquidated through savings without jeopardizing core operations. These included arrears to Zambia Revenue Authority (ZRA) contributions.

9. 2018 OUTLOOKThe major undertakings of the Commission in 2018 will include the following:

9.1 VALUE CHAIN DEVELOPMENT

The construction of Industrial Yards under the AfDB-supported Skills Development and Entrepreneurship Project – Supporting Women and Youth will commence in April 2018 in Kasama, Chipata, Kitwe, Ndola, Mongu and Solwezi Districts. Construction of the Industrial Yards in Lusaka and Mansa Districts is expected to commence in August 2018.

Foundation Stone for Mansa Industrial Yard CEEC Director General explaning the layout of the Mansa Industrial Yard via a model to the Minister of Commerce, Trade and Industry Mrs Margaret D. Mwanakatwe, MP, the Minister of Health Mr. Chitalu Chilufya, MP.,and the Minister for Luapuula Province Mr. Nickson Chilangwa, MP.


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The growing of early maturing high yield disease-free cassava by 12,000 farmers in Northern, Luapula and Northwestern Provinces under the AfDB-supported Skills Development and Entrepreneurship Project – Supporting Women and Youth will commence.

The disbursement of business loans in 30 districts of the country (3 in each province) under the AfDB-supported Zambia Aquaculture Enterprise Development Project will commence.

The disbursement of matching grants for investments in the Cashew Value Chain in Western Province under the AfDB-supported Cashew Infrastructure Development Project will commence.

10. FINANCIAL REPORT The Commission budgeted to spend K50.57 million in 2017. Of this amount K25.33 million was meant for Staff costs while the balance of K25.24 million was set aside for operating expenditure. Actual expenditure totalled K35.84 million, representing 71% of Annual Budget of which 40% went to staff costs while 31% to operating costs. Expenditure was generally within budget in all the budget lines.

The detailed breakdown of the budget performance for the year ended to 31st December 2017 is indicated in the Table 9.

Table 9 Budget Performance for Year Ended 31 December 2017

Details 2017 ANNUAL BUDGET

2017 ANNUAL ACTUAL VARIANCE % VARI-

ANCE

Income

GRZ Operational Grant 14,572,523 13,358,146 (1,214,377) -8%

Loan Interest 4,800,000 5,347,994 547,994 11%

Facility fees 2,500,000 966,671 (1,533,329) -61%

Keyman Insurance - 73,766 73,766 100%

Bank interest 4,600,000 446,106 (4,153,894) -90%

Fund management 8,500,000 6,245,527 (2,254,473) -27%

AfDB Income from Industrial Yards 4,491,000 - (4,491,000) -100%

AfDB CAPEX 1,482,835 1,482,835 - 0%

AfDB Operations 9,264,435 9,264,435 - 0%

Other income 200,000 54,037 (145,963) -73%

Total Income 50,410,793 37,239,518 (13,171,275) -26%

More Conducive Policies, Laws & Reg-ulations

Sector Code Development 80,000 - 80,000 100%

Investment Opportunity 330,242 276,459 53,783 16%

Supportive Culture 208,142 163,890 44,252 21%

Preferential Procurement 152,094 20,355 131,739 87%

Reservation schemes 220,000 40,000 180,000 82%

Sub Total 990,478 500,703 489,775 49%

Increased Access to Business Develop-ment Services (BDS)

Prioritize & Phase Cluster Development 133,500 - 133,500 100%

Application Sensitization 150,000 145,240 4,760 3%

Call For Concept Paper 282,500 - 282,500 100%

Select Concept Paper 200,500 - 200,500 100%


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Details 2017 ANNUAL BUDGET

2017 ANNUAL ACTUAL VARIANCE % VARI-

ANCE

Business Turnaround Services 68,500 - 68,500 100%

Business Plan Dev. & Assessment 320,000 83,512 236,488 74%

Commissioning of funded projects 680,000 290,982 389,018 57%

Sub Total 1,835,000 519,734 1,315,266 72%

Increased Access to Financial Services

Sign Term Sheets 13,750 - 13,750 100%

Identify and Promote Innovative Finance Options 300,000 210,255 89,745 30%

Support to Co-operatives 150,000 148,480 1,520 1%

Finance & Fund Management 120,000 485,183 (365,183) -304%

Sub Total 583,750 843,918 (260,168) -45%

Increased Access to Markets

Identify/establish producer/Market Linkages 200,000 161,965 38,035 19%

Increased support to quality assurance and Productivity 280,000 232,351 47,649 17%

Product Promotion 150,000 87,588 62,412 42%

Sub Total 630,000 481,903 148,097 24%

Good Governance Environment

Organizational Oversight 3,375,996 1,306,859 2,069,137 61%

Integrity & Good Governance 120,340 - 120,340 100%

Sub Total 3,496,336 1,306,859 2,189,477 63%

Efficient Management

Field Operation & Support 600,000 527,109 72,891 12%

Utilities & Overheads 120,000 116,958 3,042 3%

Information System Management 255,400 178,847 76,553 30%

Communication Management 960,000 1,340,391 (380,391) -40%

Monitoring and Evaluation 450,000 579,675 (129,675) -29%

Capital Expenditure, Lease Costs and Depreciation 3,090,000 1,933,628 1,156,372 37%

Capital Expenditure - AfDB 1,482,835 1,482,835 - 0%

Operating Expenditure - AfDB 9,264,435 4,605,421 4,659,014 50%

Fleet Management 425,000 414,566 10,434 2%

Human Resource Training & Development 450,000 257,034 192,966 43%

Recruitment 130,500 118,731 11,769 9%

Job Evaluation 145,000 - 145,000 100%

National Events Commemoration 100,000 75,441 24,559 25%

Pastel License and Asset management 124,453 83,821 40,632 33%

Procurement Management 112,800 54,175 58,626 52%

Sub Total 17,710,423 11,768,630 5,941,793 34%

Operational Expenditure 25,245,987 15,421,748 9,824,239 39%

Personal Emoluments 25,330,283 20,419,326 4,910,957 19%

Total Expenditure 50,576,270 35,841,074 14,735,196 29%


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11. EXTERNAL AUDIT OF THE FINANCIAL STATEMENTS11.1 AUDIT OF THE 2010, 2011 AND 2012 FINANCIAL STATEMENTS

During the year under review, the Commission concluded the external audit of the financial statements for the Years ended 31st December 2010, 2011 and 2012. The financial statements have since been submitted to the Office of the Auditor General.

11.2 EXTERNAL AUDIT OF CEEC FINANCIAL STATEMENTS

In the Year 2018 the external audit of the Financial Statements for the five (5) Years ended 31st December 2013, 2014, 2015, 2016 and 2017 is earmarked to be conducted. It is envisaged that the audit will be concluded by 30th September 2018.


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CEEC Head Office Plot No. 6457 Los Angeles Boulevard, Long Acres, LusakaTel: 0211-256020/0978-779395

CEEC Lusaka Provincial Office 21 Joseph Mwilwa Road, Rhodes Park, LusakaTel: 0211-237556

CEEC Luapula Provincial Office Rooms 108, 110 and 113, Provident House, Chitimukulu Road, MansaTel: 0212-821445

CEEC Eastern Provincial OfficeRoom 1, New Wing Provincial Administration, Hospital Road, ChipataTel: 0216-221936

CEEC Southern Provincial Office Plot DZ 188, Choma Dairy Co-operative Union Complex, ChomaTel: 0213-323363

CEEC Copperbelt Provincial OfficeRoom 188 Immigration Building, Buteko Avenue, NdolaTel: 0212-618133

CEEC Northern Provincial Office Plot No. 5 Mubanga Chipoya Road, Town Centre, KasamaTel: 0214-2214431

CEEC Central Provincial OfficeRooms 6 and 7 Labour Building, Chilufya Katebe Road, KabweTel: 0215-223915

CEEC Muchinga Provincial Office Plot 888 Kakula Street, ChinsaliTel: 0214-565118/0971-06146

CEEC North-Western Provincial Office – Rooms 111-113, NAPSA Building, Independence Avenue, SolweziTel: 0218-821713

CEEC Western Provincial Office MonguTel: 0217-221363

Email: [email protected] Visit www.ceec.org.zm

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