Zambia’s Local Content Law Wins SME Support

By Linda Soko Tembo

Small and medium enterprises (SMEs) in Zambia have hailed the government’s newly signed Local Content Statutory Instrument (SI) as a long-overdue game changer that could finally level the playing field against foreign contractors dominating the country’s major business deals.

The SI, aimed at ensuring that citizens, goods, services, and financial benefits within Zambia are prioritized in large investment projects such as mining, is expected to significantly enhance local participation in the country’s key economic sectors.

According to a statement from the Ministry of Mines and Minerals Development, the Local Content SI, signed by Minister Paul Kabuswe under the Geological and Minerals Development Act of 2025, will take effect on January 1, 2026.

Principal Public Relations Officer at the Ministry, Shamwinda Tembo, explained that the new law requires mining companies to allocate at least 20% of their procurement budgets to local suppliers for core goods and services within six months of its implementation. This threshold will progressively increase to 25% after one year, 35% after two years, and a minimum of 40% within five years.

Additionally, the regulations reserve certain categories of goods and services exclusively for Zambian-owned firms and promote the subdivision of large contracts into smaller lots to enable broader participation by local enterprises.

“To ensure compliance, mining companies will be required to submit a Local Supplier Development Programme to the Ministry and update records annually to track progress. Failure to comply will attract penalties under the Act,” he said.

Speaking in an interview, Kuzhika Limited Chief Executive Officer Nephan Kamwandi, a businessman from Solwezi District, welcomed the SI, describing it as a long-awaited legal framework to protect local entrepreneurs from unfair competition.

“In the past, we SMEs have been operating without any law to support us. There has been no legislation promoting entrepreneurship in this country. This SI is the first of its kind and gives us hope that business will finally be conducted fairly, especially with big mining companies,” Kamwandi said.

He shared personal experiences, citing instances where his company received small orders worth as little as K1,000 from major mining firms like Kansanshi Mine, while foreign-owned companies were awarded multi-million-dollar contracts.

“For me to drive from the Central Business District (CBD) to Kansanshi mine, I need about K250 for transport, and then I have to wait for that K1,000 to be paid. What kind of empowerment is that? Meanwhile, companies from South Africa or Austria are awarded contracts worth billions,” he said.

Kamwandi argued that the absence of local content laws has allowed foreign investors to dominate supply chains, sidelining Zambian businesses, especially those based in mining communities.

“Because I am local and from Mushitala community in Solwezi, I am often not given the same opportunities. These investors have been disadvantaging us. Their goal is to mine, not to empower us. But without a law to support local suppliers, they have been free to operate however they want,” he said.

He commended the government for introducing the SI, saying it will compel large corporations to engage local suppliers and foster long-term, sustainable business opportunities.

“We appreciate the government’s effort. This law will compel mine owners to deal directly with local entrepreneurs, creating valuable, long-term contracts and sustainable jobs,” Kamwandi said.

He further urged the government to expedite the identification and registration of local enterprises capable of supplying goods and services to the mining sector, suggesting that such a database would also assist foreign firms in forming partnerships with Zambian suppliers.

Kamwandi also pushed back against negative perceptions that local contractors are unreliable or incapable of meeting industry standards.

“It’s a myth that local entrepreneurs can’t deliver. When given contracts, we deliver. And if we default, there are legal mechanisms in place. The perception that we can’t be trusted must end,” he said.

The Local Content SI is expected to significantly boost the participation of Zambian-owned businesses in key sectors, particularly mining, one of the country’s primary economic drivers.

Meanwhile, Gerntina Mines CEO Moffat Mukwala confirmed that the SI was officially signed into law on October 9, 2025, at the Mulungushi International Conference Centre.

“This means that mining companies and other industries are now required to give contracts to local suppliers. The SI will transform Zambia’s business landscape by ensuring that more wealth generated from our natural resources stays within local communities,” Mukwala said.

He pointed to Mopani Copper Mines as a positive example, noting that it has already awarded contracts worth US$73 million to three local suppliers.

“This is something huge. Now the onus is on local businesses to supply quality goods and services that meet international standards,” he said.