Accelerating

Digital
Transformation
in Zambia
DIGITAL
ECONOMY
DIAGNOSTIC
REPORT
Accelerating
Digital
Transformation
in Zambia
DIGITAL
ECONOMY
DIAGNOSTIC
REPORT
© 2020 International Bank for Reconstruction and Development / The World Bank
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Cover Design: Brian Majoni

Layout Design: Diego Catto
Photo Credit: AfriDelivery, BongoHive, Women’s Entrepreneurial Access Center (WEAC), Musopa Kalenga/World Bank, Musika,.
Table of Contents
ACKNOWLEDGMENTS 9
EXECUTIVE SUMMARY 11
CHAPTER 4 DIGITAL ENTREPRENEURSHIP 17
Definitions and Analytical Framework 17
Market Size 19
Entrepreneurial Performance and Business Confidence 21
The Enabling Environment for Digital Entrepreneurship 24
Recommendations 35
Annex 4A Governmental and Nongovernmental Entrepreneurship Capacity-Building Organizations 37
References 39
 TA B L E S
4.1 Zambian Consumer Market 19
4.2 Percentage of Entrepreneurs in Zambia Who Start Businesses Motivated by Opportunity Rather Than Necessity 21
4.3 Ease of Starting a Business 28
4.4 Ease of Resolving Insolvency 28
4.5 State of Intellectual Property Protection in Zambia 28
4.6 Ease of Access to Venture Capital 33
4A.1 Government-Funded Entrepreneurship Capacity-Building Organizations 37
4A.2 Nongovernmental Entrepreneurship Capacity-Development Organizations that Target Digital Entrepreneurs 38

BOXES
4.1 eMsika—A Zambian Digital Solution for the Agribusiness Sector 20
4.2 Building the Capacity of Technology Entrepreneurs across the Continent 31
4.3 Leveraging High Net Worth Individuals for Early-Stage Investments 34
4.4 Tapping into the “Crowd” for Early-Stage Funding 34
4.5 The Kenya Industry and Entrepreneurship Project 36

FIGURES
ES.1 Priority Digital Transformation Initiatives 15
4.1 Digital Entrepreneurship Defined 18
4.2 Digital Entrepreneurship Ecosystem 18
4.3 New Business Registrations, 2015–18 21
4.4 New ICT Company Registrations in Zambia 22
4.5 Sectoral Area of Focus for Early-Stage Digital Enterprises 23
4.6 Change in the Entrepreneurship Ecosystem, percent 24
4.7 Digital Entrepreneurs’ View of What Is Most Needed for Digital Entrepreneurs to Start and Grow Their Businesses 25
4.8 Zambia’s Enabling Environment for Entrepreneurship Compared with Benchmark Countries 26
4.9 Figure 26: Business Life Cycle 26
4.10 Policy Instruments to Enable Entrepreneurship 27
4.11 Start-Up Investment Landscape in Africa 34
Acknowledgments
This report was prepared by a team from the World Bank Group,
in close collaboration with a team from the government of Zambia.

The World Bank Group team included Ellen Olafsen (Sr. Private
Sector Specialist and Task Team Leader), Ajai Nair (Sr. Financial
Sector Specialist), Kirstin Conti (Sr. Governance Specialist), Nalin
Jana (Sr. Education Specialist), Yoko Nagashima (Sr. Education
Specialist), Mupuwaliyawa (Education Specialist), Krishna Pidatala
(Sr. Operations Officer), Ida S. Mboob (ICT Specialist), Wale Ayeni (Sr.
Investment Officer), Chiijoke Gbolahan Egejuru (Investment Officer),
Laura Quiceno Hernandez (Associate Investment Officer), Lesley
Danes (Program Manager), Margareta O. Biallas (Sr. Operations
Officer), Radwa Elsharkawi (Investment Officer), Neil Butcher
(Education Consultant), Mutale K. Moyo (Education Consultant),
Henry Sichembe (Private Sector Consultant), Christoph Stork (Digital
Infrastructure Consultant), and Marcella Willis (Financial Sector
Consultant). The team benefited from the support of Namuchana
Muyawa (Team Assistant) and Musopa Kalenga (Intern).

The government of Zambia team included representatives of the

Cabinet Office (coordinating partner for the diagnostic process); the
Bank of Zambia; the Ministry of Commerce, Trade and Industry; the
Ministry of General Education; the Ministry of Finance; the Ministry
of Higher Education; the Ministry of Home Affairs; the Ministry of
National Development Planning; and the Ministry of Transport
and Communication.

The team would like to thank Sahr Kpundeh (Country Manager for
Zambia, World Bank) and Niraj Verma (Practice Manager for the
Finance, Competitiveness and Innovation Global Practice of the
World Bank Group) for their strategic guidance. Thanks also go to the
reviewers for this report for their valuable feedback: Eva Clemente
Miranda (Sr. Private Sector Specialist), Isabella Hayward (Digital
Development Specialist), Jana Kunicova (Sr. Public Sector Specialist,
and Juni Tingting Zhu (Private Sector Specialist). The team would
also like to acknowledge the contributions of Steven Dimitriyev
(Lead Private Sector Specialist), Rama Krishnan Venkateswaran
(Lead Financial Management Specialist), and Samson Chabuka
Kwalingana (Country Economist).

Comprehensive national stakeholder consultations—engaging both

the private and public sectors—were undertaken in preparing and
finalizing this document.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 9
Executive
Summary
Zambia’s 7th National Development Plan (7NDP) sets ambitious
targets for economic growth and poverty reduction. Technology can
play an important role as Zambia advances this vision for economic
transformation.

Recent evidence tells us that reaching the goal of universal and

affordable internet coverage can raise growth per capita by 2
percentage points per year and reduce the poverty headcount by 1
percentage point per year. When internet coverage is complemented
by human capital investments, growth per capita increases by
approximately 5 percentage points and the poverty headcount falls
by 2.5 percentage points per year. These contributions to growth are
mainly due to growth in productivity across economic sectors; digital
transformation is thus part and parcel of economic transformation.

The introduction of digital systems can also have a transformative

effect on government. It is estimated that developing countries could
collectively save 0.9 to 1.1 percent of GDP, equivalent to $220 billion
to $330 billion annually (IMF 2017), by introducing digital systems in
government that increase efficiency and reduce the potential for
leakages to occur. Additionally, significant effectiveness gains can
be realized by equipping government officials responsible for public
service delivery with access to better data and tools.

Improved access to digital technologies and effective use of data and

digital systems can thus be powerful tools in the quest to increase
private sector productivity, enhance public sector efficiency and
effectiveness, and improve the accountability of both the public and
private sectors. Indeed, 7NDP includes several digital transformation
strategies for these reasons.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 11
This digital economy diagnostic assesses Zambia’s strengths and less costly for financial services providers and consumers, and it was
weaknesses with respect to five pillars that together form the among the first set of countries to allow nonbank payment service
foundation upon which the benefits of digital transformation can be providers. Access to financial accounts more than doubled from
realized. These pillars are Digital Infrastructure, Digital Skills, Digital 21 percent in 2011 to 46 percent in 2017, and increased access to
Entrepreneurship, Digital Platforms, and Digital Financial Services. As mobile money providers has been driving the bulk of this growth
discussed in the 2016 World Development Report (World Bank 2016), since 2016. The private sector clearly sees the provision of DFS as
progress in these areas—combined with “analog complements,” that an opportunity; the DFS market now includes 10 banks, 3 mobile
is, a favorable business environment, strong human capital, and good network operators, and 5 third-party providers, including financial
governance—can enable and accelerate development returns. technology companies. In June 2019, the national payment switch
enabled the interoperability of all domestic transactions. This
This digital economy diagnostic was carried out by a multidisciplinary functionality was expected to be available for all point-of-sale and
World Bank Group team in close collaboration with a multiministerial mobile money transactions by the mid-2020. This step would further
working group, led by the Cabinet Office. More than 100 stakeholders increase convenience and reduce costs for citizens and businesses.
from the public and private sectors were engaged in interviews,
focus groups, and workshops to derive, triangulate, and validate Substantial progress is also reported to have been made to digitize
the findings. government salary and pension payments; some gains have been
made in government-to-business and government-to-government
In summary, this analysis finds that Zambia has made significant payments; and early efforts have been made to digitize receipts
strides on its path to digital transformation over the past few years. from businesses and individuals. Early indications are that important
Progress is particularly evident in digital infrastructure, digital results are being achieved: preliminary data from the digitization of
financial services, and digital platforms, while more significant gaps government pay slips show that transaction costs decreased by 85
remain in digital skills and digital entrepreneurship. percent and several “ghost” workers were identified and removed.
Similarly, when the pension authorities introduced a mobile-enabled
With respect to digital infrastructure, all provincial centers are now module, contributions increased substantially.
linked to the fiber backbone, and the country has a state-of-the-art
data center that can be leveraged for government and commercial These early results demonstrate the promise of greater use of
use. International benchmarks for affordability of broadband have also digital payment systems in Zambia. However, several payment
been met, and the use of mobile phones has increased significantly, systems have just initiated their digitization journey, and most
reaching 15.5 million mobile subscriptions in 2019, out of which 63.5 government payments for social cash transfers and subsidies are
percent use broadband. The digital infrastructure foundation has not yet digitized. Opportunities therefore exist to initiate or expand
thus been built to now focus on the use of the infrastructure, as well the digitization of such government payments for the purpose of
as on ensuring the reliability and security of the infrastructure that is efficiency gains and increasing the resilience of vulnerable and often
in place. However, last mile connectivity remains a gap, preventing unbanked populations (for example, smallholder farmers and social
greater use of digital systems in more sparsely populated areas cash recipients). With the advancement of DFS, the need to develop
where access to services and markets is more limited, and where adequate consumer protection measures is also pressing.
digital systems could help reduce transaction costs associated with
serving smaller populations. The cost of connectivity also imposes Payment systems is only one of several areas in which the Zambian
a barrier to greater citizen and business take-up caused by low government can—and is—taking steps to use digital tools to increase
income levels, calling for measures to reduce connectivity costs. the efficiency of government services. With respect to digital
platforms, the 7NDP sets specific targets for providing government
Despite these remaining connectivity challenges, the take-up of services online, and Zambia is now among the top 10 in the least
digital financial services (DFS) has increased significantly since 2016. developed countries category of the E-Government Development
This illustrates that Zambia does not have to wait to deliver more Index published by the United Nations. The government has
services via mobile; a two-pronged strategy can be pursued that launched internal systems for internal government administration,
enables more mobile-based service delivery while steps are taken and government-to-person and government-to-business services
to promote greater last mile connectivity in secondary towns and are increasingly digitized. However, interoperability between systems
rural areas. is often lacking, thus reducing their benefit to citizens, businesses,
and government; usage and usability are not consistently monitored,
With regard to DFS specifically, Zambia has had a strong commitment and some systems suffer from a limited scale of implementation or
to financial inclusion over the course of the past several years. The from deterioration.
country recognized early on that DFS can make financial inclusion

12 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
Furthermore, the ability to authenticate that people are who they say partnerships that make public funds stretch further. The public-
they are is fundamental to financial and public services delivery. The private dialogue during the diagnostic process also indicated
current identification system has several weaknesses in this regard, recognition of the challenge associated with regulating digital
and the Zambian government has determined that a biometric innovation and the importance of engaging in continued dialogue
national ID system would be the optimal approach for Zambia. to ensure that regulators provide clarity and strike the difficult
Investments in a modernized ID system can result in significant balance between enabling innovation and ensuring that citizens
fiscal returns, but it can also involve a significant fiscal outlay, thus are protected.
requiring careful consideration.
Surprisingly, a relatively large proportion of start-ups focus on
To enable Zambia to make greater use of digital technologies as a e-commerce. This is remarkable given the significant obstacles to
transformation tool, individuals, businesses, and government must e-commerce in Zambia; only a small proportion of the population has
also have the requisite digital skills. This is an area in which Zambia a home address, and goods ordered online can therefore not always
has made less progress. The 7NDP Implementation Plan aims to have be efficiently and reliably delivered to the buyer. Long distances and
information and communications technologies (ICT) mainstreamed high logistics costs also affect the viability of both domestic and
in schools, and the new competency-based national curriculum has cross-border trade. Considerable improvements in addressing and
made ICT a compulsory subject. In practice, however, most schools logistics will therefore be needed before e-commerce significantly
are not connected to the internet, they do not have adequate access benefits Zambia. The government has recognized this obstacle
to devices, and teachers have limited knowledge of how to use ICT in and has recently embarked on the development of a new national
teaching and learning. Furthermore, the quality of general education logistics strategy.
is of serious concern; for example, fewer than one-third of learners
pass their grade 12 examination. All in all, Zambia has made important strides in initiating a digital
transformation process, but there is still a long way to go. As was
Zambia will not realize the full benefits of digital transformation—nor acknowledged by H.E. President Lungu in a speech to the National
will it meet its 7NDP goal of facilitating “innovative technologies skills Assembly in September 2019, Zambia’s fiscal space is limited, and
development”—unless it also ensures that learners going through the there is a need to “achieve economic stability, sustainable growth
school system are equipped with foundational numeracy and literacy and development, within the spirit of ‘doing more with less.’”
skills. However, there is still room to better leverage digital tools for
teacher training and access to up-to-date educational materials, as The authors recommend that the government of Zambia develop
well as for education policy planning and monitoring and evaluation. a digital transformation strategy with a dual focus on meeting
With regard to government capacity in digital skills, important gaps the 7NDP targets and improving the country’s fiscal space. This
remain to ensure the ability across ministries and government offices recommendation is closely aligned with the “doing more with less”
to systematically develop, maintain, and use digital systems. mantra introduced by H.E. President Lungu, and it emphasizes the
use of digital technology to improve (1) public sector efficiency and
The requisite digital and entrepreneurial skills are also needed to effectiveness, (2) private sector productivity, and (3) accountability
advance digital entrepreneurship; it is digital entrepreneurs who will across both the public and private sectors.
derive innovative solutions to public and private sector challenges
that can be resolved through the application of technology. Against this background, this report suggests that the digital
Zambia has seen an increase in the registration of ICT-related firms transformation strategy include four strategic themes (figure ES.1):
between 2016 and 2019, and entrepreneurs are initiating innovative (1) promoting greater use of digital technologies in the economy,
digital solutions in a wide array of sectors, including financial (2) reducing government transaction costs and reducing the cost of
services, education, tourism, and agriculture. Although a handful doing business through digitally optimized government systems, (3)
of entrepreneurs are now delivering solutions at scale, most digital improving the adoption of innovative digital solutions by enabling
enterprises in Zambia are at the very initial stages of development. entrepreneurship, and (4) leveraging data and digital systems
to improve sector-specific outcomes in secondary towns and
Zambia’s Global Entrepreneurship Index scores in Startup Skills, rural areas.
Technology Absorption, and Risk Capital are very low, and
entrepreneurial confidence is declining. Concerns about these Promoting greater use of digital technologies in the economy.
four areas were also expressed repeatedly in the consultations Enhanced broadband usage alone contributes significantly to growth
for the diagnostic. Zambia is, however, fortunate to have a range and poverty reduction. Additionally, initiatives undertaken under this
of nascent private entrepreneurship initiatives that, coupled with theme are foundational to greater adoption of digital technologies
increasing corporate interest, can lend themselves to public-private by citizens, businesses, and government. The probability of success

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 13
of initiatives launched under the other strategic themes will thus sandbox for digital innovation that provides digital entrepreneurs
be limited without progress under this theme. Priority activities with a clearer mechanism for navigating regulatory requirements
suggested under this theme include (1) streamlining compliance for innovative products and services; and (2) developing a start-up
costs for connectivity providers; (2) strengthening government strategy that includes attention to technology entrepreneurship and
capacity in cybersecurity, data privacy, and consumer protection; (3) that leverages the competency and resources of the Ministries of
developing a road map and implementation plan for the rollout of Higher Education and Commerce, Trade and Industry as well as the
digital ID that carefully considers the costs and benefits of the vast private sector and the continental entrepreneurship ecosystem.
array of design options; and (4) partnering with the private sector to
map and fill the digital skills needs for government to successfully Leveraging data and digital systems to improve sector-specific
design and implement priority digital transformation activities. outcomes in secondary towns and rural areas. Initiatives undertaken
under this theme would focus on the digital transformation of a
Reducing government transaction costs and the cost of doing sector (such as agriculture, education, or health) with the purpose of
business through digitally optimized government systems. Initiatives increasing the effectiveness of public service delivery or increasing
undertaken under this theme will have the most immediate and productivity and reducing vulnerability. This theme will necessarily
direct budgetary impact while also promoting private sector activity draw upon the other three themes, and should be planned spatially
without much additional fiscal outlay. Priority activities suggested to ensure economies of scale and thus increased attractiveness for
under this theme include (1) developing a government-wide private sector participation.
implementation approach to advancing and scaling up digitization
of major government payment flows (such as social cash, fertilizer While this report provides a suggested prioritization of digital
subsidies, school fees, taxes, customs, and licenses), and (2) transformation activities, it is recommended that the government
optimizing and scaling up the e-border management, e-licenses, create a Digital Transformation Steering Committee to lead
and public e-procurement systems. the articulation of the digital transformation strategy and
implementation matrix. Given that this agenda cannot be achieved
Improving adoption of innovative digital solutions by enabling by one ministry alone, the committee should have representation
entrepreneurship. Initiatives undertaken under this theme will ensure from multiple ministries. Relatedly, a dedicated public-private Digital
that the private sector has the capacity to develop innovative solutions Transformation Advisory Council may be advisable to ensure that the
to resolve public and private sector challenges. Priority activities expertise of nongovernmental actors is leveraged in the articulation
suggested under this theme include (1) conducting a regulatory of the strategy and implementation matrix and to optimize the
review assessing how tax, labor, and other pertinent regulations likelihood that the private sector buys into, and therefore contributes
affect enterprises at the start-up stage, and developing a regulatory to, implementation.

14 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
 ES1

PRIORITY DIGITAL EXPECTED 7NDP

TRANSFORMATION ACTIONS OUTCOMES TARGETS

Promote greater use of digital

1
technologies in the economy.
• Streamline compliance costs for connectivity providers,
and develop a framework for PPP investments in last REDUCED
mile connectivity DEVELOPMENT
INEQUALITY
• Strengthen the institutional capacity of government to protect
consumers, data, and critical digital infrastructure
• Develop a detailed implementation road map for the
modernization of the ID system, and implement the same
• Map data and skills needs to support evidence-based policy
planning; integrate data collection, accessibility, and analysis into ENHANCED
digital government systems planning; and partner with the private HUMAN
sector to implement DEVELOPMENT
INCREASED
Reduce government transaction costs and the cost of PUBLIC
2 SECTOR
doing business through digitally optimized systems
EFFICIENCY
• Develop a government–wide implementation approach to digitize AND
major government payment flows (social cash, fertilizer subsidies, EFFECTIVENESS
school fees, tax, customs, and licenses) DIVERSIFIED
• Optimize and scale the e-border management, e-licenses, and ECONOMY
public e-procurement systems

VISION 2030
• Enable data sharing and compatibility between core government
systems starting with enforcing interoperability standards and
publishing the API road map INCREASED
PRIVATE
SECTOR
Improve adoption of innovative solutions REDUCED
3 by enabling digital entrepreneurship.
PRODUCTIVITY
POVERTY AND
VULNERABILITY
• Conduct a regulatory review related to start-ups and develop a
regulatory sandbox for digital innovation
• Develop a start-up strategy, including explicit attention to
technology entrepreneurship
• Invest in PPPs to seed and scale up programs that build start-
INCREASED
up skills, provide startup financing, and link entrepreneurs to PUBLIC AND
regional markets CONDUCIVE
PRIVATE
GOVERNANCE
SECTOR
Leverage data and digital systems to improve sector- ACCOUNTABILITY
4
specific outcomes in secondary towns and rural areas
• Identify two to three priority sectors for transformation, agriculture,
education, and health MACRO TARGET
• Based on current national strategies derive priority challenges to
address, engage the digital entrepreneurship community to identify
innovative digital transformation solutions that work, and partner
with the private sector to replicate and scale them.
• Plan spatially such that economies of scale are achieved, using an IMPROVED
integrated approach that takes into account the connectivity, skills, FISCAL SPACE
and systems required

Note: 7NDP = 7th National Development Plan; API = application programming interface; PPP = public-private partnership.

REFERENCES World Bank. 2016. World Development Report 2016: Digital

IMF (International Monetary Fund). 2017. Digital Revolutions in Public Dividends. Washington, DC: World Bank. https://openknowledge.
Finance. Washington, DC: International Monetary Fund. worldbank.org/bitstream/handle/10986/23347/9781464806711.pdf.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 15
C H A P T E R
Digital
Entrepreneurship
Definitions and
Analytical Framework

For the purpose of this diagnostic,

• Entrepreneurship is defined as the process of designing,

launching and running a new business (Hsieh and Wu 2018).
• Digital entrepreneurship is defined as the process of designing,
launching and running a new business wherein creating and
using novel digital technologies is a driver of new value creation.
New digital ventures are thus characterized by high intensity use
of new digital technologies (particularly social, mobile, analytics,
and cloud solutions) to improve business operations, invent
new (digital) business models, sharpen business intelligence,
and engage with customers and stakeholders through new
(digital) channels.

Figure 4.1 provides an illustration of the wide range of digital

entrepreneurship. When the term “digital entrepreneurship” is used
in this chapter, it generally refers only to platform companies and
providers of technology solutions.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 17
 FIGURE 4.1:
DI G I TA L ENT R EPR EN E U R SH I P DE F I N E D

Users of Platform Providers of

technology solutions companies technology solutions

Businesses that Businesses that Service providers Providers Sellers of Designers Businesses
use digital tools use digital tools made possible of digital hardware, and that provide
for business for transactions due to digital products software, manufacturers artificial
communication or precision platforms (for (for example devices, of hardware intelligence,
and market manufacturing or example Uber, games, and and robotics, Big
information production AibBnB) edutech) connectivity software Data mining

Source: Original figure for this publication.

The notion of a digital entrepreneurship ecosystem is used to conducive to digital entrepreneurship (figure 4.2). Human capital
analyze the enabling environment for digital entrepreneurship. In this and infrastructure are discussed extensively in the Digital Skills and
framework, markets, policy, financial capital, human capital, culture, Digital Infrastructure chapters, respectively. Therefore, this chapter
supports, and infrastructure constitute the key interdependent focuses on markets, policy and regulation, supports, and finance.
variables that create an enabling environment that either is or is not

FIGURE 4.2:
DI G I TA L ENT R EPR EN E U R SH I P EC O SYST E M

• Availability and pricing of digital devices • R&D environment & institutions

and platforms • Venture-friendly legislation
• Availability and pricing of Internet access and processes
• Digital commerce channels and value chains • Texation
• Financial inclusion levels • Foreign business friendliness
• Digital Industry support
and incentives
Policy • Entrepreneurship strategy and
• Availability aof regulatory framework incentives
software developers (e.g. tax benefits)
• Skill-levels of developers Markets Financial
Capital
• Managerial and organizational
• Angel investors
skill levels
• Venture capital/private equity
• Creative skills
• Debt finance
• General availability of
• Capital markets
skilled labor
• Foreigh investment
Human Culture
• Internet speed Capital
• Energy • Business activity (esp in
• Transportation & logistics creative sectors)
Infrastructure
• Tech hubs, co-working, places, incubators, & Supports • Attitudes toward entrepreneurship
and accelerators • Risk tolerance
• Professional (social) networks • Confidence
• Entrepreneur-friendly associations • Social media attention
• Events and conferences • Role models

Source: World Bank Group.

18 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
Market Size

The market for digital entrepreneurs comprises consumers, countries, Rwanda has a smaller consumer market, while Côte
businesses, and government. The Zambian consumer market d’Ivoire, Ghana, and Kenya all have significantly larger markets than
is quite small if measured by purchasing power—although the Zambia. Zambian entrepreneurs are therefore more likely to have to
population stands at 17 million, 57.5 percent live on less than $1.90/ tap into regional markets to grow their businesses.
day. Comparatively, as illustrated in table 4.1, among the benchmark

TABLE 4.1:
ZAM BI A N CO NS UM E R M AR K E T

Population Size Rural Population GDP per Capita Poverty Headcount

(million) (%) ($) (% living on less than $1.90/day)
Rwanda (12.2) Ghana (45) Rwanda (748) Ghana (13.3)
Zambia (17.0) Côte d’Ivoire (50) Zambia (1,513) Côte d’Ivoire (28.2)
Côte d’Ivoire(24.3) Zambia (57) Côte d’Ivoire (1,537) Kenya (36.8)
Ghana (28.8) Kenya (73) Kenya (1,594) Rwanda (55.5)
Kenya (49.7) Rwanda (83) Ghana (2,046) Zambia (57.5)

As discussed in chapter 2 on Digital Infrastructure, the number of of digital technologies in Zambia is very scarce and dated. The
mobile and broadband subscribers in Zambia is increasing; as of most recent representative collection of data on this topic was the
2018, 9.8 million out of Zambia’s population of 17 million were using World Bank Enterprise Survey conducted in 2013. At that time, 20
mobile broadband. This number already offers a potential consumer percent of firms had a website and 53 percent had access to email.
market for mobile solutions such as digital payments, e-commerce, Furthermore, 35 percent of manufacturing firms used information
and other platform services such as ride-sharing. As government and communications technologies (ICT) for marketing and 25
efforts to promote last mile connectivity continue, the addressable percent for managing inventory or selling online. Services firms
market will grow accordingly. made much less use of ICT; only 22 percent used ICT for marketing
and about 15 percent used it for selling online. These usage patterns
However, the 2018 Zambia Information and Communication trailed those of Kenya, but they were ahead of Ghana by a significant
Technology Authority (ZICTA) survey shows that out of the 14.3 margin. A new World Bank Enterprise survey is underway and will
percent of the population who have access to the internet, only be completed in 2020. This survey will provide updated data on
5.6 percent use the internet for online shopping, 5.5 percent use firm-level ICT usage in Zambia, which is likely to have increased
it for internet banking, and only 10 percent use it for “business.” significantly in line with expanded connectivity.11
The consumer market for internet-based solutions is thus very
small in Zambia, relating back to issues of limited connectivity and Digital financial services are likely the most immediately relevant and
affordability (see chapter 2 on Digital Infrastructure) and limited value-adding services for the majority of firms in the economy, and
digital skills as discussed in chapter 3 on Digital Skills. the entrepreneurial community is responding. As detailed in chapter
6 on Digital Financial Services, a 2018 survey counts 25 financial
The Zambian business market segment comprises approximately technology firms (fintechs)12 operating on the market (UNCDF
490,000 registered firms. Although the business market segment 2018). Entrepreneurs are also responding with solutions to logistics,
is more likely to yield a profitable business proposition for digital market, and education challenges. Box 4.1 features eMsika, which is
entrepreneurs than the consumer market, data on firm-level use a good example.

11. The next Enterprise Survey will be concluded in 2020 and includes the following questions related to ICT use: (1) At the present time, does this establishment have its own
website or social media page? (2) In fiscal year 2018, did this establishment use mobile money to receive payments from customers? (3) In fiscal year 2018, what percentage of
annual sales did this establishment receive from customers using mobile money? (4) In fiscal year 2018, did this establishment use debit or credit card payments via point-of-
sale devices to receive payments from customers? (5) In fiscal year 2018, what percentage of annual sales did this establishment receive from customers using debit or credit
card payments?
12. Different definitions of fintech have been used by international bodies and national authorities. Drawing on these, the Bali Fintech Agenda proposed by the International
Monetary Fund and the World Bank Group adopts a broad interpretation of fintech to describe the advances in technology that have the potential to transform the provision of
financial services spurring the development of new business models, applications, processes, and products.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 19
 BOX 4.1:
EMS IK A : A ZA M B I A N DI GI TAL S O LU T I O N FO R THE AGRIBUS INES S S ECTOR
eMsika was founded in 2016 by Elton J. Chirwa and Gilbert Mwale, both Zambians,
ages 26 and 25, respectively. Elton and Gilbert grew up in Chipata. Their lives were
characterized by farming, especially Gilbert’s, whose father was a manager in the
Eastern Cooperative Union until it was privatized, which led to the family depending
on growing maize and tobacco. They did not grow any other crop nor did they keep livestock, which meant they earned a seasonal
income and led a tough life. Gilbert believed farming was for the poor until he went to India to study and learned that technology,
such as e-commerce, can make access to agricultural inputs easier. Elton and Gilbert then decided to research why so many
farmers in Zambia struggled with production and productivity. They found that one of the biggest problems is access to quality
farm inputs, just like in the case of his father who only stuck to growing two crops. This prompted them to start an online company
to service the agriculture market for farm inputs targeting farmers and agro-dealers who lack access to quality inputs.

To date, eMsika has reached 1,200 farmers, 6 agro-dealers, and 15 agricultural input suppliers. eMsika’s services allow the target
audience to focus on their core competence while eMsika conveniently helps them find and receive farm inputs using their mobile
phones, both smart and feature phones.

According to Gilbert, “In the next 5 years, eMsika would like to take advantage of the African Continental Free Trade Agreement
(AfCTA) to upscale into the COMESA [Common Market for Eastern and Southern Africa] and SADC [Southern African Development
Community] regions.”

In addition to the immense volume of small and medium enterprises

(SMEs), the government can be a significant market for digital
entrepreneurs. As discussed in chapter 5 on Digital Platforms, a
range of initiatives to advance digital government-to-citizen and
government-to-business services have been initiated. There is also
scope to initiate, leverage, and scale up digital platforms in the delivery
of health, education, and agricultural services (see box 7.3 in chapter
7). Opportunities for Zambian digital entrepreneurs to participate in
the development of such solutions can occur through government
procurement and through government publication of an application
programming interface (API)13 road map, and entrepreneurial
support facilitated through technology entrepreneurship hubs. With
regard to opportunities to leverage government procurement, well-
structured joint ventures between emerging entrepreneurs and
larger, more experienced international firms could be encouraged to
facilitate knowledge transfer to Zambia’s nascent local private sector,
while still benefiting from the experience of more mature firms. If the
procurement route is pursued, it is critical that payments occur on
time—small and growing companies do not have sufficient cash flow
to buffer significantly delayed payments. Such issues have led to low
uptake of government procurement opportunities in South Africa, for
example. Developing and publishing an API road map would allow
software developers to identify upcoming opportunities for solution
development. Developers could be informed of these opportunities
through an industry forum facilitated by the government, focusing
on areas of development of high priority to the government (see
further discussion on this in chapter 5 on Digital Platforms).

13. . APIs are digital codes that are at the core of establishing interoperability between systems.

20 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
Entrepreneurial Performance and Business Confidence

THE STATE OF ENTREPRENEURSHIP IN ZAMBIA

Digital entrepreneurship takes place within the broader context of Since 2016 the number of new business registrations has increased
entrepreneurship generally. It is thus important to understand the steadily (figure 4.3), but business confidence and perceptions of
state of entrepreneurship at a general level before delving into the likelihood of achieving growth have declined. The increase in
digital entrepreneurship specifically. new business registration is driven by locally owned businesses in
wholesale and retail trade, by a wide margin. These businesses are
likely to be composed primarily of necessity-driven entrepreneurs
who see an opportunity to gain income for their families in trading.

FIGURE 4.3:
NEW BUS INES S R EGI ST R AT I O N S, 20 1 5 –1 8

11,500

11,000
New business registrations

10,500

10,000

9,500

9,000

8,500
2015 2016 2017 2018

Source: PACRA 2018. Local companies Foreign companies

This necessity-driven entrepreneurship is corroborated by the likelihood that opportunity entrepreneurs will achieve significant
trends in the Global Entrepreneurship Index. As illustrated in table growth. Similarly, the Zambia Chamber of Commerce and Industry
4.2, the percentage of entrepreneurs that start businesses motivated (ZACCI) Business Confidence Index shows declining trends in
by opportunity rather than necessity is declining, as is the perceived business confidence over the first two quarters of 2019.14

TABLE 4.2:
PERCE NTAG E O F EN T R E P R E N E U R S I N Z AM B I A WHO S TA RT BUS INES S ES
M OTI VAT ED BY O PPO RT U N I T Y R AT H E R T H AN NECES S ITY

2016 2018 Trend

Opportunity start-upa 38 30

High growthb 11 9

Source: Global Entrepreneurship Index 2018.

Note: a. Opportunity start-up is a measure of start-ups by people who are motivated by opportunity.
b. High growth is a combined measure of the percentage of high-growth businesses that intend to employ at least 10 people and plan to grow more
than 50 percent in five years (Gazelle variable) with business strategy sophistication (Business Strategy variable) and venture capital financing possibility
(Venture Capital).

14. The Business Confidence Index (BCI) is collected through a survey delivered by ZACCI. According to ZACCI, a BCI higher than 100 points signifies positive sentiments about
the business climate and a BCI lower than 100 points signifies negative sentiments about the business climate. Zambia’s BCI has been low, scoring 23.6 points in the first quar-
ter of 2019 and 51.3 points in the second quarter of 2019.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 21
 Although the above points provide an indication of perceived
potential for growth, actual firm performance data, such as change
in sales revenue or employment, are generally not available,
suggesting that improved interoperability between the Patents
and Companies Registration Authority and the Zambia Revenue
Authority could provide valuable data points for the purpose of
informing evidence-based policy formulation (see chapter 5 on
Digital Platforms for further discussion on interoperability).

THE STATE OF DIGITAL

ENTREPRENEURSHIP IN ZAMBIA
The direct contribution of the ICT sector to GDP more than dou-
bled, from 1.6 percent in 2010 to 4.4 percent in 2018. ICT company
registrations also grew steadily from 2015 to 2018. As illustrated in
figure 4.4, the most significant growth in new ICT company registra-
tions is in the “computer programming activities” subcategory. This
growth is occurring despite the shortage of quality skilled labor
(see chapter 3 on Digital Skills), and it is perhaps also an indicator of
the increased demand for programming skills. In 2017 and 2018, the
highest number of new company registrations were in the “other in-
formation technology and computer service activities” subcategory.

FIGURE 4.4:
NEW I C T CO M PA NY R EGI S T R AT I O N S I N Z AM B I A

200
Number of registrations

150

100

50

0
2015 2016 2017 2018

Source: PACRA 2018.

Computer consultancy and computer Computer programming Other information technology and
facilitis management activities activities computer service activities

Many digital enterprises do not define themselves as ICT companies. The largest digital enterprise categories were focused on digital
For example, an enterprise that uses a digital platform for the purpose financial services (20 percent) and e-commerce (15 percent) (figure
of ride-sharing may classify itself as a transport company rather than 4.5). The former is not surprising given the rapid uptake of digital
an ICT company, and a payment service riding on a mobile platform financial services, but the focus on e-commerce is a surprise, given
may classify itself not as an ICT company, but as a financial services the significant obstacles in Zambia. Only a small proportion of the
provider. It is therefore a challenge to obtain, in any country, a full population in Zambia has a home address. Goods that are ordered
overview of all digital enterprises. However, in an attempt to gauge online can therefore not always be efficiently and reliably delivered
what the start-up community in Zambia is engaged with, all the to the buyer. Long distances and high logistics costs also affect the
digital entrepreneurship support organizations (tables 4A.1 and 4A.2 viability of both domestic and cross-border trade. Although these
in annex 4A) in Lusaka were contacted and a list of entrepreneurs that firms are currently earning revenue, whether they can become
have participated in their programming requested. The enterprises profitable and sustainable in the long run is not clear. Significant
on this list that are currently engaging with customers were then improvements in the addressing system and logistics likely need to
identified. This exercise yielded a list of about 120 digital enterprises be made for e-commerce companies to be viable in Zambia. See
operating across a range of “traditional” sectors, including tourism, chapter 5 on Digital Platforms for a more detailed discussion.
health, agriculture, education, and financial services.

22 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
 FIGURE 4.5:
SECTO R A L A R EA O F FO C U S FO R E A R LY- S TAGE D IGITA L ENTERP RIS ES

Tourism

Gamification

Environment

Logistics

Health

Graphic Design

Business Management

Agriculture

Education

Transport and Delivery

Other

Media and Marketing

IT COnsulting and

Programming

e-commerce

Financial Services

0 5 10 15 20 25

Number of start-ups

Source: World Bank primary research for this publication.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 23
The Enabling Environment for Digital Entrepreneurship

Even though Zambian entrepreneurs see opportunities, they lack 2016 ranking. Zambia’s highest scores are in Opportunity perception
the skills and resources to convert these opportunities into viable— and Internationalization, whereas the lowest scores are found in
and growing—enterprises. With regard to an enabling environment Startup skills, Technology Absorption, High Growth Enterprise and
for entrepreneurship, the 2018 Global Entrepreneurship Index ranks Risk Capital. As illustrated in figure 4.6, these are the same scores as
Zambia 102nd out of 137 countries worldwide, and 9th out of 30 in 2016. Unfortunately, if going by the GEDI data, the trend appears
countries in Sub-Saharan Africa. This is quite similar to the country’s to be going toward a less, rather than more, enabling environment.

FIGURE 4.6:
CHANG E IN T HE ENT R E P R E N E U R S H I P EC O SYSTEM, P ERCENT

Opportunity
Perception
Risk 50 Startup
Capital Skills
45
40
Internationalization 35 Risk
30 Acceptance
25
20
High 15 Networking
Growth 10
5
0

Process Cultural
Innovation Startup

Product Opportunity
Innovation Startup

Human Technology
Capital Absorption
Human
Capital

Source: Global Entrepreneurship Index 2016, 2018. 2016 2018

24 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
The authors distributed a survey to 40 early-stage digital enterprises Index (figure 4.7), as do the views of entrepreneurship support
in Zambia. These entrepreneurs were asked, “In your view, what do organizations interviewed for this diagnostic report. Additionally,
entrepreneurs that are starting a digital business in Zambia today the authors’ survey captured tax constraint as a barrier. This
need most to optimize their chance of creating a profitable business?” topic was investigated further and is elaborated in chapter 5 on
The answers of the 30 entrepreneurs who responded to the survey Digital Platforms.
align well with the trend observed in the Global Entrepreneurship

FIGURE 4.7:
DI G I TA L ENT R EPR EN E U R S’ VI E W O F W H AT I S MO S T NEED ED
FOR DI G ITA L ENT R E P R E N E U R S TO STA RT AN D GROW THEIR BUS INES S ES

100

90 83.33

80

70
60.00
56.67
60 53.33
PERCENT

50
40.00
40

30
16.67
20

10 3.33

0
More training and Access More Less taxes More flexible Cheaper or Other
guidance on how to to better affordable during the labor more reliable
identify and pursue technical access to start-up regulation access to
viable business skills finance phase internet
opportunities

Source: Survey of 40 early-stage digital enterprises in Zambia, 2019

The authors distributed a survey to 40 early-stage digital enterprises Index (figure 4.7), as do the views of entrepreneurship support
in Zambia. These entrepreneurs were asked, “In your view, what do organizations interviewed for this diagnostic report. Additionally,
entrepreneurs that are starting a digital business in Zambia today the authors’ survey captured tax constraint as a barrier. This
need most to optimize their chance of creating a profitable business?” topic was investigated further and is elaborated in chapter 5 on
The answers of the 30 entrepreneurs who responded to the survey Digital Platforms.
align well with the trend observed in the Global Entrepreneurship

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 25
 FIGURE 4.8:
ZAM BI A’S ENA BL ING E N V I RO N M E N T FO R E N T REP RENEURS HIP COMPA RED WITH BENCHMA RK COUNTR I ES

Opportunity
Perception
Risk 50 Startup
Capital 45 Skills

40
Internationalization 35 Risk
30 Acceptance
25
20
High 15
Networking
Growth 10
5
0

Process Cultural
Innovation Startup

Product Opportunity
Innovation Startup

Technology
Competition
Human Absorption
Capital

Source: Global Entrepreneurship Index 2018. Zambia Ghana Kenya Rwanda

ENTREPRENEURSHIP FROM START-UP TO SCALE

Entrepreneurship can be thought of as a process. For market critical to think of entrepreneurship policies as a means not only to
opportunities to materialize into market entry and growth, enable the entrepreneur’s entry into the market (that is, registering
entrepreneurs must recognize the opportunities, possess the a business or making the first sales), but to enable a young firm’s
ability and resources to pursue them, and be willing to follow this growth. This is important because the needs of entrepreneurs
path instead of other potentially rewarding options such as present change as they move from idea to prototype to engaging with
or alternative employment or unemployment. An entrepreneur’s customers (start-up) and finally to earning revenue, making a profit,
willingness is closely tied to perceived risk and reward. It is thus and investing in growth (figure 4.9).

FIGURE 4.9:
BUSI N ES S L IF E CYC LE

PROFIT Company A

Company B

Start-up Company C
Idea Prototype Engaging with
customers
BREAK-EVEN
Time
Early Expansion
Growth Company D
Steady
LOSS State

Source: Original figure for this publication.

26 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
A wide range of policy options are in place to promote policy instruments most relevant to digital entrepreneurship are
entrepreneurship in any given sector, the main categories of highlighted in blue. The next sections discuss to what extent these
which are summarized in figure 4.10. The majority of these policy policy instruments are used to promote digital entrepreneurship
options are also applicable to digital entrepreneurship specifically, in Zambia, and to the extent possible, whether they are having the
although national quality infrastructure and industrial policies may desired effect on the start-up and growth of digital enterprises.
be less so, compared with entrepreneurship in other sectors. The

FIGURE 4.10:
POLI CY INS T RUM EN TS TO E N AB LE E N T R E P R E NEURS HIP
DIRECT SUPPORT REGULATORY AND INDIRECT SUPPORT
Provision of goods Collaborative Nonmarket Market-based Advocacy and
and services policies incentives incentives voluntary Regulations

Intellectual

Fiscal interventors
Equity Standards
property nights
Science finance Mentoring
Indicators

and and
techno coaching
Tecnology, parks Labor
Public procurement

extension Competition
Competi- market and
support, policy
tive grants, skills
business Clusters
prizes,
advi- and Grants
inducement,
sory, and networks and
and expost
supplier matching Tax and Spatial
recognition
develop- National grants Networking insolvency policies
awards
Acceletators

Loan garantees
ment qual- and
ity infra- access
structure to information
Industrial Trade and
policies FDI policies
Vouchers

Source:: Grover, Medvedev, and Olafsen 2019.

Note: FDI = foreign direct investment.

POLICY AND REGULATION

Zambia does not have an entrepreneurship policy per se, but three and Implementation Plan envision significant investment in the
policies are currently under development that could be harnessed capacity of—and resources available to—innovators, it is silent on
to improve the enabling environment for entrepreneurship generally the “incentive regime,” that is, the regulatory factors that affect
and digital entrepreneurship specifically. These initiatives include a entrepreneurs’ perceptions of risk and reward and thus their
new Science, Technology and Innovation (STI) Policy, shepherded willingness to invest in growth (these factors are largely captured
by the Ministry of Higher Education; and the 2009–2019 Micro, Small, under “Regulations” in figure 4.10). The 2009 MSME Policy also
and Medium Enterprise (MSME) Policy and the new E-commerce does not discuss the incentive regime for the start-up and growth
Policy led by the Ministry of Commerce, Trade and Industry. The of enterprises in any detail, although reference is made to the
Science and Technology Council anticipates that the new STI Policy Companies Act, the Income Tax Act, and the National Employment
will be tabled for Cabinet approval by the end of 2020, while the new and Labor Act as being relevant to MSME development.
MSME and E-commerce policies will likely be tabled for Cabinet
approval in the first quarter of 2020. The state of business registration, insolvency, taxes, labor, and
intellectual property regulations and procedures and their
The new policies under development do not touch on the regulatory implications for incentives for entrepreneurs generally, and digital
environment for entrepreneurs. Although the updated STI Policy entrepreneurs specifically, is discussed below.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 27
Business Registration
TABLE 4.3:
Zambia currently scores 85 out of 100 on the Starting a Business EAS E OF S TA RTING A BUS INES S
indicator of the World Bank’s Doing Business Rankings (World Bank
Group 2019) (table 4.3). This score is a slight improvement from 2018
Starting a Business
and is significantly better than Côte d’Ivoire and Ghana, but worse
Ranking Score Ranking Score
than Kenya and Rwanda. Although significant improvements have
2018 2018 2019 2019
been made that reduce the time and complexity of registering a
Côte d’Ivoire 44 91.72 26 93.70
business in Zambia (see chapter 5 on Digital Platforms), the cost of
starting a business is greater than 30 percent of income per capita. Ghana 110 84.02 108 84.29

This cost, of course, creates a hurdle for self-made entrepreneurs Kenya 117 83.20 126 82.41
who are not independently wealthy. Comparatively, the cost of Rwanda 78 87.66 51 91.39
starting a business is 24.9 percent of income per capita in Kenya, Zambia 101 84.89 102 85.07
15.5 percent in Ghana, 14.8 percent in Rwanda, and 2.7 percent in
Côte d’Ivoire. Source: World Bank Group 2018, 2019.

Insolvency TABLE 4.4:

EAS E OF RES OLVING INS OLVENCY
What will happen if the business fails also affects an entrepreneur’s
willingness to start a new business—an inherently risky proposition.
Zambia currently scores 42 out of 100 on the Resolving Insolvency Resolving Insolvency
indicator of the Doing Business rankings (table 4.4), which leaves Ranking Score Ranking Score
much room for improvement. Kenya and Rwanda score significantly 2018 2018 2019 2019
higher, while Ghana lags behind Zambia by a wide margin. Côte d’Ivoire 77 47.81 80 48.00
The efficient resolution of insolvency is important both for the Ghana 158 24.77 160 24.94
entrepreneur directly and for investors, which has been recognized Kenya 95 43.11 57 57.41
by Zambian authorities. The World Bank Group is therefore actively Rwanda 78 47.79 58 57.20
assisting the government in implementing the new Corporate Zambia 89 44.85 99 42.42
Insolvency Act by providing capacity-building to commercial judges,
strengthening the implementation of the collateral registry, and Source: World Bank Group 2018, 2019.
assisting the insolvency regulator (the Patents and Companies
Registration Agency) in performing its duties.

Intellectual Property Protection TABLE 4.5:

S TATE OF INTELLECTUA L P ROP ERTY
Digital entrepreneurs are perhaps more likely than entrepreneurs in
P ROTECTIO N IN Z A MBIA
many other sectors to have intangible assets that are core to their value
proposition. Therefore, adequate intellectual property protection
IP protection (index 1–7)
is important for encouraging investment in this sector. According
to the World Economic Forum’s Global Information Technology 2016 2017 Variation (%)
Report, Zambia scored 3.96 out of 7 in the level of intellectual Côte d’Ivoire 3.93 3.75 −4.58
property protection in 2017, which is a drop from 2016 (table 4.5). Ghana 3.93 4.06 3.31
Compared with the benchmark countries, Zambia ranks second to Kenya 3.96 4.36 10.10
last. However, Zambia’s 2018 Trade Policy clearly acknowledges Rwanda 5.26 5.18 −1.52
that effective protection of intellectual property rights is “necessary Zambia 4.23 3.96 −6.38
for technology transfer, innovation and economic development,”
and sets concrete objectives to strengthen the “implementation of Source: Baller, Dutta, and Lanvin 2016; World Economic Forum, Global
national intellectual property rights legislation” (Republic of Zambia, Competitiveness Index 2016.
Note: IP = intellectual property.
Ministry of Commerce, Trade and Industry 2018, 14).

28 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
Taxes and Fees this Act…(3) A person shall not employ or engage any person who
Although corporate tax rates have little effect on starting a business, does not hold a practicing certificate. (4) A person shall not operate,
given that revenues are nonexistent or negligible, they do have either on that person’s own behalf or on behalf of another person,
an impact on profitability and incentive to scale up. The standard an information and communications technology business that does
corporate tax rate in Zambia is 35 percent, but the rate varies from not have a registered member with a valid practicing certificate in
industry to industry. For example, companies in farming and agro- its employment. (5) A person who contravenes this section commits
processing pay a 10 percent tax, whereas companies in mining, an offence and is liable, on conviction, to a fine not exceeding seven
fertilizer manufacturing, and nontraditional exports pay a 15 percent hundred thousand penalty units or to imprisonment for a term not
tax. ICT companies pay a 35 percent tax on profits up to 250,000 exceeding seven years, or to both.”
Zambia kwacha (K) and 40 percent on profits beyond K 250,000.
There is no tax holiday, across industries, for the early stage of very The key challenge with this act is that although membership is
small firms. However, this study has not looked at available tax mandatory by law, it is not clear (1) what constitutes an “appropriate
deductions that may be of particular benefit to entrepreneurs. combination of recognized qualifications and practical experience,”
and (2) what “related concepts” include, and therefore how far
As is common in most countries, business owners also pay labor- reaching the act is. In contrast to professions such as medicine or
related fees. An employer’s contribution to the Zambian National law, there is no one standard certification for an ICT professional. This
Pension Scheme is 5 percent of the salary of an employee (up to industry in particular has many people who acquire their ICT skills
a ceiling of K 1,073.80 per month), and contributions to the Public outside of formal education but are fully proficient. It would thus
Service Pension Fund and the Funeral Insurance Fund are 1 percent be very difficult to derive a standard metric to which all applicants
and 0.6 percent, respectively. There is also a municipal tax known as should be held. The act could thus lead to anti-competitive behavior
a “personal levy,” which is a maximum of K 15 per year. An employer’s excluding legitimate professionals or businesses from the market.
contribution to the Workers’ Compensation Fund is assessed Moreover, the act may encourage skilled Zambian ICT professionals
according to the risks employees face in the workplace. These fees to find work outside Zambia, thus decreasing the pool of the very
are payable as soon as a start-up registers the company. same professionals of which there is currently a shortage.

Labor Preparation for a digitized economy would require some coordination

Of particular importance to Zambia is the recently approved of policies related to education, the labor market, taxes, housing,
Information and Communication Technology Association of Zambia social protection, and research and innovation (OECD 2019). In the
Act of 2018. The intent of the act is to “regulate the professional conduct” South African country report, policy coordination is highlighted
of “information and communications technology professionals,” as a key recommendation (World Bank Group forthcoming). The
defined as “a person who possesses the knowledge, competence policy landscape in South Africa is well developed, and significant
and skill to conduct research, plan, design, write, test, provide advice progress has been made to implement policies that could optimize
and improve information and communications technology systems, a digital economy. However, coordination between governmental
software and related concepts for specific applications and has departments is lacking, resulting in an education system that does
appropriate combination of recognized qualifications and practical not respond to digital skills needs, digital skills research that takes
experience.” A prospective member must apply to the association place in a different department than the National Skills Authority, and
and pay a fee. Membership has been made mandatory, and practicing no explicit policy guidance on how the digital skills gap in different
without it is punishable by prison: “A person shall not practice as an sectors should be addressed. Zambia can learn from South Africa’s
information and communications technology professional, unless experience by assigning an interministerial task team to align digital
that person holds a practicing certificate issued by the Board under skills policies with other national policies and priorities.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 29
FIRM-LEVEL CAPABILITY AND SUPPORTS
Zambia’s 2009 MSME Development Policy states that “the culture of entrepreneurs in Zambia: the Zambia Development Agency (ZDA)
entrepreneurship and business practice is still not well developed (under the Ministry of Commerce, Trade and Industry), the National
among Zambian citizens. This could be related to a cultural mind set Technology Business Center (NTBC) (under the Ministry of Higher
of dependency and a low propensity for risk taking. This has resulted Education), and the innovation program run by ZICTA (under the
in low levels of entrepreneurial ability and business management Ministry of Transport and Communication). Neither of the three
competency among most SMEs. These low levels of entrepreneurial major universities—University of Zambia, Mulungushi University,
skill and management competency have limited the ability of most and Copperbelt University—appear to have innovation, technology,
MSMEs to grow beyond the establishment phase.” or entrepreneurship centers or institutes. They do, however, offer
ICT and business curricula and are increasingly integrating ICT in
The 2019 Global Entrepreneurship Index indicates that Zambia’s risk the business course curricula and vice versa. It is not clear what the
acceptance is 22 percent and cultural support 29 percent. The Risk entrepreneurship offering is at the secondary school level.
Acceptance score is similar to that of Ghana, and ahead of those
of Kenya and Rwanda, but Cultural Support for Entrepreneurship Out of the three organizations, only ZICTA has an offering specific to
is much higher in Ghana and Rwanda than in Zambia. By contrast, digital entrepreneurs; ZDA offers general business capacity building
high-income countries that are regarded as highly entrepreneurial, and NTBC offers intellectual property protection services, which in
namely Sweden, Switzerland, and the United States, score 75, 89, principle could be valuable to digital entrepreneurs. An overview of
and 98 percent, respectively, for Cultural Support. the mandate and capacity building offered by these organizations is
provided in table 4A.1 in annex 4A.
With regard to evolution in entrepreneurial skills and management
competency, the 2018 Global Entrepreneurship Index indicates ZICTA and NTBC struggle with continuity in their programming
that factors related to firm-level capability such as start-up because of budget uncertainty. The number of beneficiaries and
skills, technology absorption, and human capital rate very low. the scope of services that can be provided therefore change from
Entrepreneurial skills and firm-level capability thus remain at low year to year. All three organizations have capacity-building staff only
levels, even though the 2009–2018 SME Policy focused significantly in Lusaka.
on building entrepreneurial and SME capacity, and increasing
SME access to market opportunities, business development ZICTA and NTBC struggle with continuity in their programming
services, finance, and operating premises. In the area of capacity because of budget uncertainty. The number of beneficiaries and the
development, a key goal of the SME Policy includes “to improve scope of services that can be provided therefore change from year
innovation and level of technology and technical know-how among to year. All three organizations have capacity-building staff only in
SMEs,” while policy strategies include a range of instruments such Lusaka.
as “entrepreneurship training at all levels of the education system,”
“institutes of MSMEs and Entrepreneurship in selected business In addition to the publicly funded entrepreneurship capacity-
schools,” business incubation centers, technology innovation development organizations, several private initiatives have
centers, and annual award schemes and competitions. emerged since 2010. Organizations that specifically target digital
entrepreneurs include BongoHive, Jacaranda Hub, and WeCreate
It appears, however, that several of these programs were not (table 4A.2 in annex 4A). Additionally, private corporations have
implemented, likely because of a lack of funding. A policy review is played a significant role in promoting the growth of tech hubs on
currently ongoing with an objective of releasing an updated strategy the continent (box 4.2). This approach is also starting to emerge
by the end of 2020. in Zambia. For example, Zanaco recently initiated an innovation
center; Liquid Telecom is helping to accelerate Zambia’s emerging
The entrepreneurship capacity-building service offer in Zambia is gaming and Internet of Things ecosystem through a partnership with
quite young, and there are few digital entrepreneurship capacity- BongoHive; and Barclays has been assisting the activities of several
development players. Three government-funded entrepreneurship of the governmental and nongovernmental entrepreneurship
support organizations provide capacity-building services to digital support organizations in Zambia.

30 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
 BOX 4.2:
BU IL D ING T HE C A PAC I T Y O F T EC H N O LO GY ENTREP RENEURS ACROS S THE CONTINENT
According to an overview prepared by Briter Bridges and the GSM Association, there are now more than 600 tech hubs across
Africa, an increase of 40 percent since 2017. While Zambia and Rwanda have fewer than four such hubs, Côte d’Ivoire has 22, Ghana
25, and Kenya 48 (map B4.2.1). Government and the private sector have key roles to play in advancing this support system across
the continent.

Internationally, government support for tech hubs generally takes three forms: (1) funding for the operational budget of the hub; (2)
provision of free or subsidized real estate, electricity, and connectivity; or (3) financing for the entrepreneurs that benefit from the
hub. These models can be found in high- and low-income countries alike. Some governments also set corporate participation in the
hub as a prerequisite for government funding so as to leverage the market knowledge and network of the corporation to further
the growth of start-ups benefiting from the hub.

Corporations have taken a more active role in establishing or supporting tech hubs globally. Indeed, a large number of hubs
across Sub-Saharan Africa have been supported by mobile operators and internet providers. According to Briter Bridges, the
mobile network operator Orange has been setting up Orange Fab labs across Francophone Africa, while MTN and information
and communications technology infrastructure providers such as Liquid Telecom have also launched in-house tech hub initiatives
(such as MTN’s Y’ello Startup in Abidjan) in several markets on the continent. Financial institutions such as Standard Bank have also
entered the game by setting up incubators in countries including Angola and Mozambique. Similarly, Standard Chartered Bank
recently set up eXellerator in Nairobi.

MAP B4.2.1:
OV ERV IEW O F TEC H H U B S I N AF R I C A

29
Tunisia
31
Marocco
56
Egypt,
14 Arab Rep
Mali

15
Senegal

22 10
25 85
Côte Uganda
D’Ivoire Ghana Nigeria 48
13 Kenya
Togo 17
18
Tanzania
Cameroon
50+ Hubs
20–49 Hubs
10–19 Hubs
5–9 Hubs
1–4 Hubs 12
No data Zimbabwe
80
South
Africa

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 31
 Additionally, there are four coding communities in Zambia that focus
on promoting programming skills—Agora Code Community, Hackers
Guild, forLoop Zambia, and Facebook Developer Circle, which were
formed in 2015, 2014, 2016, and 2017, respectively. These communities
are complemented by the recently launched Barbara Munyati Cisco
Academy and Oracle Academy at the University of Zambia (see
chapter 3 on Digital Skills for further discussion of these initiatives).

All in all, while countries such as Ghana and Kenya are getting to a
stage in the evolution of their entrepreneurship ecosystems where
consolidation and focus is required, Zambia’s entrepreneurship
support system is nascent and needs further investment to boost
entrepreneurial and technical capabilities. Importantly, sustained
programming is needed that creates a pipeline of entrepreneurs
who recognize market opportunities and have the aspirations and
knowledge to derive marketable ideas. This process starts in the
school system, and is then followed by initiatives such as hubs,
incubators, and accelerators. Among these initiatives, very little
support is currently available to assist technology entrepreneurs
beyond the idea stage with building their enterprises. This assistance
requires knowledge of the dynamics of the technology sector and
experience-based guidance to entrepreneurs. Finally, while current
initiatives are primarily available in Lusaka, these offers need to be
extended to other cities, such that a critical mass of creative tech
entrepreneurs is generated.

The Implementation Plan accompanying the new STI Policy rightly

envisions increased investment in “incubation centers,” and the
establishment of “innovation hubs,” “innovation high tech centers,”
and “science and technology parks.” Technology transfer offices in
universities and links with industry are also envisioned. Curiously,
however, the Implementing Institutions mentioned in the plan only
include the Ministry of Higher Education and the National Science
and Technology Council. The Ministry of Commerce, Trade and
Industry is not included, nor are any private sector organizations. The
2009–2019 MSME Policy is also under revision and features plans
around entrepreneurship capacity development, making this is an
opportune juncture to review how the Ministry of Higher Education
and the Ministry of Commerce, Trade and Industry, along with the
Ministry of Transport and Communication, for digital specifically,
can design a more comprehensive approach to advancing
entrepreneurship support. There is also clearly an opportunity for
partnerships with the private sector, whether they be corporations or
nongovernmental entrepreneurship support organizations such as
BongoHive, Jacaranda Hub, and WeCreate. In addition to the ideas
outlined in the new STI Policy, one concept floated by the SMART
Zambia Institute, the Ministry of Commerce, Trade, and Industry, and
ZICTA is the potential for an “innovation park” that would provide the
infrastructure required for digital entrepreneurs. A good example of
this is in place in Ghana, and could offer helpful ideas and lessons for
Zambia (see appendix B).

32 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
FINANCIAL CAPITAL
Access to finance is a real challenge for entrepreneurs in Zambia, Discussions with more than 100 early-stage digital entrepreneurs
and even more so for digital entrepreneurs. As a rule of thumb, digital revealed the following funding sources for the very few entrepreneurs
entrepreneurs at the start-up phase generally need $10,000–$25,000; that had been able to secure external funding: GSMA Ecosystem
entrepreneurs at the acceleration stage need $25,000 up to about Accelerator Innovation Fund (UK-based grant program funded by
$500,000; and entrepreneurs at the scale-up stage hit the $1 million UKAid and Australia Aid), Ground Squirrel Ventures (US-based equity
and above mark. There are many regional and international investors seed fund), Barclays Bank, Hivos Impact Capital (equity investments
willing to make deals in the latter category, so the core challenge and convertible loans in the food and lifestyle sector in Southern
is at the start-up and acceleration stages. This is common across Africa; based in the Netherlands with an office in South Africa), Kukula
countries, but in Zambia the challenge is more acute—there are no Seed (Zambia-based equity seed fund funded by UKAid), United
grant programs available to technology entrepreneurs; the banking Nations Capital Development Fund, Zambia National Commercial
sector is lending at exorbitant rates because of Zambia’s macro and Bank, and Financial Sector Deepening Zambia. Three of these eight
national debt situation; there is only one fund investing in the sub are international sources, illustrating that while there is a need to
$100,000 range (Zenga Ventures); and only one fund is investing in create a funding vehicle targeting the start-up stage in particular, a
the $100,000–$500,000 range (Kukula Seed Fund). complementary strategy is to ensure that promising Zambian start-
ups are seen by regional and international early-stage investors.
According to the World Economic Forum Global Competitiveness
Report, which ranks venture capital availability in countries on a scale According to Partech, 2018 was a record year for the African venture
from 1 to 7 (1 being extremely difficult and 7 being extremely easy ), 15
capital market; 146 African tech start-ups raised a total of $1.163 billion
venture capital availability in Zambia is ranked at 2.16—worse than in equity through 164 rounds, significantly more than the $560 million
Côte d’Ivoire, Ghana, Kenya, and Rwanda—and the trend is a slight raised in 2017 (Partech Partners 2018). Funding increased across the
worsening (table 4.6). business life-cycle stages. Kenya, Nigeria, and South Africa absorbed
78 percent of the total funding in 2018, exactly the same as in 2017.
Although numerous investment facilities are available regionally
TABLE 4.6: (figure 4.11), Partech only recorded one funding round in Zambia,
EASE O F ACCES S TO V E N T U R E C A P I TA L totaling about $1 million. The Emerging Markets Private Equity
Association recorded only one deal in Zambia in 2016, and none in
Venture Capital Availability 2017. In comparison, $266 million was deployed in 15 venture capital
[1 = extremely difficult; 7 = extremely easy] deals in Ghana in 2016–17.

WEF Global WEF Global The Zambian government recognized the early-stage financing
Competitiveness Competitiveness challenge many years ago; the 2019 revision of the STI Policy notes
Report, Executive Report, Executive Variation that the 1996 Policy provided for “the creation of a Venture Capital
Opinion Survey, Opinion Survey, Fund,” but the fund did not materialize because of “inconsistences
2016–17 (2016) 2016–17 (2017)
in the Science and Technology Act No. 26 of 1997 and the policy
on the operationalization of the Fund. In addition, the size of the
Côte
3.02 2.72 −9.93 money market; limited expertise in venture capital management;
d’Ivoire
inadequate financial resources; and the limited output of research and
Ghana 2.35 2.57 9.36 development products also contributed to the Fund not materializing.
The Policy also provided for the establishment of a Technology
Kenya 2.93 3.03 3.41 Business Development Fund (TBDF) to promote the involvement of
MSMEs in the commercialization of locally developed technological
products and innovations. Although the TBDF has been established,
Rwanda 3.28 3.24 −1.22
it is yet to have a significant impact on the sector as the Fund remains
inadequate.” It may thus be time to review potential options for
Zambia 2.21 2.16 −2.26
creating a public-private partnership in the early-stage-financing
segment. Other relatively unexplored possibilities in Zambia include
Source: World Economic Forum 2016. the promotion of angel investing and crowdfunding (see boxes 4.3
Note: WEF = World Economic Forum. and 4.4).

15. . “In your country, how easy is it for start-up entrepreneurs with innovative but risky projects to obtain equity funding? [1 = extremely difficult; 7 = extremely easy]”

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 33
 BOX 4.3: BOX 4.4:
LEVE R AG ING HIG H N E T WO RT H TA P P ING INTO THE “CROWD ”
I N DI V ID UA L S FO R E A R LY- S TAGE I N V EST M E N TS FO R EA RLY-S TAGE FUND ING
An angel investor is a private individual who directly invests his Crowdfunding uses the internet to bring together individuals
or her personal assets in new and growing businesses. Angels (“the crowd”) who commit money to projects and companies
invest individually or in collaboration with others. Angels they want to support. Kickstarter and Indiegogo are among the
commonly contribute much more than just cash; they often most well-known platforms for individuals to pledge money for
have industry knowledge and access to networks that they projects they want to support. Similarly, Kiva.org has been fund-
make available to their investees. Business angel networks ing small business owners in emerging markets for more than a
are emerging in many countries across the continent, most decade, and GoFundMe is a more recent entrant in leveraging in-
recently in Benin, Mali, Senegal, and Togo. These networks ternet-based crowdfunding for small businesses. New platforms
have a variety of operating models. For example, South are also emerging offering equity products, including AngelList,
Africa’s Jozi Angels entered a partnership with the South CircleUp, and OurCrowd. Crowdfunding offers businesses an-
African government’s Technology Innovation Agency to co- other alternative for raising money, but it is not without risk for the
invest alongside members of this investor network, intending investor or investee. Crowdfunding thus poses new regulatory
to pilot a public-private partnership. Similar approaches have challenges for governments, and world-wide regulations related
been adopted in Lebanon and Morocco. to various forms of crowdfunding are still under development.

From a regulatory perspective, Zambia is tracking relatively well for Finally, access to finance must always be assessed from a supply-
investor protection compared with the benchmark countries in this and demand-side perspective. Because start-up skills and level of
analysis, but it still has a score of 5.3 out of 10, which leaves significant innovation score low in Zambia, investibility in early-stage enterprises
room for improvement. There does not appear to be any capital gains may also be low. Any intervention in the early-stage finance sphere
tax, which would be an incentive at exit, but there are also no income must thus be coupled with one in firm-level capability.
tax write-offs associated with investing in start-ups.

FIGURE 4.11:
START- UP INV ES T ME N T LA N DSC AP E I N AF R I C A

Source: Briter 2018.

34 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
Recommendations

Zambia saw an increase in the registration of ICT-related firms from Important inputs to the articulation of this strategy would be a review
2015 to 2018. Entrepreneurs are deriving innovative digital solutions of the incentive regime for early-stage entrepreneurship and a
in a wide array of sectors, including financial services, education, review of lessons from the implementation of previous policies and
tourism, and agriculture. However, entrepreneurial confidence is strategies. The review of the incentive regime could include engaging
declining, and both firm-level capability and early-stage finance are at the Business Regulatory Review Agency to review (1) the tax regime
lows. These factors are not specific to digital enterprise, but also span for start-ups and early-stage investors, (2) the effect on digital
across other sectors. Articulation of an entrepreneurship strategy and enterprises of duties on ICT-related equipment, (3) the framework
investment in financial and nonfinancial entrepreneurship support for participation of local entrepreneurs in public procurement, (4)
are needed. In this regard, Zambia is fortunate to have a range of the ZICTA licensing regime for digital enterprises, (5) the potential
nascent private entrepreneurship initiatives, coupled with increasing impact of the new ICT Association Act on the competitiveness and
corporate interest, both of which can lend themselves to public- growth of the ICT sector, and (6) Patents and Company Registration
private partnerships that make public funds stretch further. Also Agency registration types and implications. Additionally, a review
recommended is a regulatory review that includes an assessment of should be undertaken to assess what can be done to reduce
how the current tax regime, ICT-related import duties, licensing fees, the cost of registering a business and to improve the insolvency
and the ICT Association Act affect the ability of innovative digital regime. A reform agenda could then be developed for inclusion
enterprises to start and grow their businesses. in the strategy. The review of lessons from the implementation of
previous strategies is important because both the old STI Policy and
Although the market for digital entrepreneurs is small, the old MSME Policy had visions for the implementation of policy
entrepreneurship—digital or not—is core to Zambia’s ability to instruments that could indeed enable early-stage entrepreneurship,
transform its economy. Recent research has shown that high-growth including technology, yet implementation was not what it could have
firms tend to be younger than the average firm, and they are not been. Therefore, a key question is what could be done differently in
necessarily small. Many high-growth firms are already larger than the future to increase the chances of success
the average firm at the beginning of a high-growth episode (Grover,
Medvedev and Olafsen 2018). A business life-cycle approach is thus Second, seed and scale up (technology) entrepreneurship hubs and
needed for an entrepreneurship policy to have the desired effect, early-stage financing instruments through public-corporate and
and such policies should be cross-sectoral first, and then address any regional partnerships. Such hubs are likely needed at secondary
particular constraints in specific sectors. Two key recommendations school and university levels, and at the level of professionals that
are provided below. venture into starting their own businesses after several years of work
experience. Each level needs a different approach, aligned with
First, develop an early-stage entrepreneurship strategy, which should the capabilities of that level. To leverage scarce public resources,
include a subsection on technology entrepreneurship specifically. Zambia could consider public-private partnership funding for the
It appears that Zambia has not yet introduced a business life-cycle operation of technology entrepreneurship hubs and for seed funds
perspective into its policy and regulation framework. Such a strategy (that is, in the form of a revolving fund), and offering corporations
would necessarily entail collaboration between the Ministry of tax incentives for in-cash or in-kind support to entrepreneurship
Commerce, Trade and Industry; the Ministry of Higher Education; and endeavors such as internships, coaching, and facilities.
the Science, Technology and Innovation Council in its formulation. As
illustrated by the emergence of several private initiatives over the past During the expansion of such hubs, it will be important to clarify what
few years, the government also has a real opportunity to develop this government organizations are best positioned to provide, and what
strategy and the implementation plan in coordination with the private private initiatives are best able to offer. Entrepreneurship hub models
sector, thus leveraging financing and know-how. range from those that simply offer an occasion for entrepreneurs to
meet and exchange experiences with other entrepreneurs; those
This is an opportune time to develop such a strategy, given the that offer training programs, mentoring, and coaching; and those
ongoing review of the MSME Policy and the Science, Technology that offer physical facilities and equipment. Increasingly, more
and Innovation Policy. A framework for collaboration with the private research is becoming available internationally on these various
sector in the implementation of these two policies to leverage operating models and their performance (GALI et al. 2017; ITC 2019).
private sector know-how and resources could also be included, and This literature can be consulted to articulate an approach that fits
the institutional stewardship of the early-stage-entrepreneurship— the Zambian context. Additionally, it may be useful to take the initial
including technology—agenda could be clarified. mapping done for the purpose of this analysis one step further,

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 35
and through a public-private co-creation process develop a “core
BOX 4.5:
competence map” that indicates which organizations can best be
THE KENYA IND US TRY A ND
leveraged to do what. ENTREP RENEURS HIP P ROJECT
In Kenya, most incubators and accelerators have been
Given the challenge with last mile digital infrastructure and low- funded by the development community. This funding over
level digital skills in Zambia, it may be wise to explore shared facility time changed from core operational funding to funding of
models, similar to the Accra Digital Center in Ghana (see appendix B) very specific and time-bound projects, leaving many of these
and iHub in Kenya, that can serve as hubs for up-skilling and reliable incubators and accelerators with a very thin operational
internet access for teachers and entrepreneurs. A model for such budget that affected both the strategic focus and internal
investment elsewhere includes using public funds for construction capacity of these entities.
and infrastructure (such as reliable power) and then soliciting a
private sector operator and anchor tenants that can create a market- The Kenya Industry and Entrepreneurship Project (KIEP) is a
driven environment for entrepreneurs and skills provision. Given $50 million project that is being implemented by the Ministry
that such models have now been developed in several countries, a of Industry, Trade and Cooperatives of Kenya, with support
significant body of lessons has emerged that explores what makes from the World Bank Group.
some of these endeavors “white elephants” while others thrive.
The design and investment plan of any such initiatives should thus KIEP aims to strengthen the innovation and entrepreneurship
carefully examine these lessons and adapt them to the Zambian ecosystem in Kenya by building the capacity of incubators,
context before any decisions are made as to the location, scope, or accelerators, and rapid technology skills providers through
business model. performance-based grant funding. It also seeks to connect
the Kenyan ecosystem to international networks of talent
Importantly, such a public-private partnership model should and support infrastructure, and foster links between start-
necessarily be accompanied by a solid monitoring and evaluation ups and traditional industry. In addition, KIEP aims to bridge
framework that provides incentives for positive outcomes. Too often, the technical skills gaps in the market by linking young talent
entrepreneurship support programs are monitored by counting and academia to the private sector.
outputs such as the number of entrepreneurs trained, or the number
of SMEs served. Such metrics are not meaningful gauges of the KIEP was launched in June 2019 and will run until 2024.
effectiveness of entrepreneurship programs. Rather, monitoring
and evaluation systems should focus on learning and business
transformation outcomes. Finally, as the government advances its approach to support a new
generation of private sector firms and solution providers, establish
Because many entrepreneurship-support initiatives that provide a platform for public-private dialogue. First, entrepreneurship
either support with start-up skills or investments are occurring at the ecosystem representatives should be engaged in a facilitated
regional level, a concerted effort should be made to ensure that the discussion of priority challenges that need to be addressed in the
entrepreneurship-support organizations in Zambia are visible at that ecosystem, and then an implementation matrix and accountability
level. A potential avenue may be to host pitch events that regional framework should be developed that outlines what will be done by
or international organizations are delivering on the continent. This whom and by when, thus enabling the government and the private
approach could serve the dual purpose of gaining Zambia visibility on sector to assess progress and jointly discuss adjustments that may
the regional entrepreneurship scene while signaling to the Zambian be needed.
entrepreneurship community that there are wider opportunities and
possibilities opening up for partnerships with other entrepreneurs on
the continent to reach a bigger market.

The Kenya Industry and Entrepreneurship Project provides a useful

reference point for what a public-private-partnership approach to
enhancing the innovation and entrepreneurship ecosystem could
look like (box 4.5). Although the Kenyan entrepreneurship ecosystem
is more advanced than that in Zambia, the approach remains highly
relevant to the Zambian context.

36 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
Annex 4A Governmental and Nongovernmental
Entrepreneurship Capacity-Building Organizations

TABLE 4A.1 :
G OVER NM ENT- F UNDE D E N T R E P R E N E U R SH I P CA PACITY-BUILD ING ORGA NIZ ATIO NS

ZDA NTBC ZICTA Innovation Program

ZICTA’s primary mandate is to

NTBC was established by the regulate the ICT sector. However,
ZDA was established by the ZDA Science and Technology Act the Information and Communication
Act of 2006. It became operational No. 26 of 1997 and Statutory Technologies Act No. 21 of 2009
in 2007. ZDA has a broad mandate Instrument No. 136 of 1999. It also provides ZICTA with a mandate
Mandate
including SME development, export has been operational since 2002. to “promote research, development
development, and investment NTBC was established to promote, and the use of new and appropriate
promotion. market, commercialize, and transfer technologies.” It was under this
technologies in Zambia. remit that ZICTA started the ICT
Innovation Program in January 2016.

Entrepreneurs and MSMEs at all Youth between the ages of 18

Target Innovators and entrepreneurs at all
stages of the business life cycle and 35 who have an ICT-related
beneficiary stages of the business life cycle.
and in all sectors. business idea.

In 2018, more than 3,500

beneficiaries applied for support
According to ZDA, a total of 2,100 from NTBC. However, it is unclear
MSMEs were supported in 2018. It how many entities NTBC will be In 2018, ZICTA’s Innovation
is not clear, however, how many of able to support because of the Program enrolled 60 start-ups in
these were digital enterprises. The limited funding allocated in the a four-month training program. In
Current offer
service offer is also described in national budget. It is also not clear 2017, 20 start-ups were enrolled.
to digital
very general terms, that is, “capacity how many of these applicants were The program’s capacity is highly
entrepreneurs
building” and “business incubation” digital enterprises. In principle, dependent on securing external
for MSMEs. It is therefore difficult however, NTBC has a business funding year by year, and its offer
to discern what may be valuable to development and intellectual thus varies accordingly.
digital entrepreneurs specifically. property capacity-building offer
that could be valuable to digital
entrepreneurs.

ZICTA initiated the Innovation

NTBC is funded by a national
ZDA is funded by a national budget Program with its own retained
budget allocation through the
allocation through the Ministry of earnings. The vision was that the
Ministry of Higher Education. It
Commerce, Trade and Industry. program would, over time, become
has also received funding from
Funding It has also received funding from an ICT incubator that would attract
cooperating partners including
model Barclays Bank and most recently external funding. External project
Denmark, Finland, Norway and
the mining companies First funding has to date been provided
USAID in the past. No fees
Quantum Minerals and Lumwana by Barclays Bank and IHS Towers.
are charged to beneficiary
Barrick. No fees are charged to beneficiary
entrepreneurs.
entrepreneurs.

Source: ICT = information and communications technology; MSMEs = micro, small, and medium enterprises; NTBC = National Technology Business Center;
SME = small and medium enterprise; USAID = United States Agency for International Development; ZDA = Zambia Development Agency; ZICTA = Zambia
Information and Communication Technology Authority.

D I G I TA L E C O N O M Y D I A G N O S T I C R E P O RT 37
 TABLE 4A.1 :
NON G OV ER NM ENTAL E N T R E P R E N E U R SH I P C APACITY-D EVELO P MENT
ORGANIZ AT IO NS T H AT TA RGE T DI GI TAL E N T R EP RENEURS

BongoHive Jacaranda Hub WeCreate

BongoHive was started in 2011 by

WeCreate was started in 2015 by
four entrepreneurs. The original
a Public Enterprise Development
vision was to create a community
Jacaranda Hub was started in 2017 Specialist with support from the
for like-minded technology
by an entrepreneur who also has US Department of State and in
entrepreneurs, where they could
corporate experience. Her vision for collaboration with Caterpillar
meet to exchange knowledge.
Jacaranda Hub is to “play a leading Foundation, GriffinWorx, and the
Over time, the offer has evolved
Vision role in connecting entrepreneurs African Women Entrepreneurship
to assisting scalable start-ups
to global markets, collaborative Program. WeCreate is specifically
by enhancing skills, accelerating
opportunities, skills development, designed to advance gender
growth, strengthening networks,
financing, latest technologies and equality in entrepreneurship
increasing collaboration, providing
exposure.” and to address barriers faced by
a forum for ideas exchange,
women seeking to start and grow a
and reducing barriers to
business.
entrepreneurship.

Target Idea and start-up stage Idea and start-up stage Idea, start-up, and early-stage, pre-
beneficiary entrepreneurs. entrepreneurs, particularly youth. and post-revenue.

BongoHive provides three offers

Jacaranda Hub provides two
to digital entrepreneurs: a three-
offers to digital entrepreneurs: one
month program targeting idea-
includes a network of tech hubs WeCreate offers trained and
stage entrepreneurs that supports
and accelerators that can support certified mentors to support women
them with testing their idea, a
start-ups with design, development, entrepreneurs with business
Current offer three-month program targeting
and market access, and the other model development, go-to
to digital start-ups to accelerate their growth,
focuses in particular on supporting market strategies, technology and
entrepreneurs and a scale-up program targeting
entrepreneurs who aim to solve innovation, as well as social training
the most promising start-ups.
major social or environmental (life skills), and a safe and positive
Additionally, a range of master
problems through innovation. About environment to develop a business.
classes are offered to teach specific
600 young people benefited from
skills on app development, social
these programs in 2018.
media, and so forth.

The start-up of BongoHive was

supported in-kind by VVOB, the
Jacaranda Hub is largely self
former employer of the founders. WeCreate has received funds
funded. Some 20 percent of the
Today, 5 percent of operating from cooperating partners, the
operating expenditures are covered
Funding expenditures are covered by fees US Department of State, Citi
by revenues from the start-up
model charged to the entrepreneurs. Foundation, and Atlas Mara. It also
journal published by Jacaranda
Cooperating partners have raises funds from fees covering 22
Hub. Partners have also provided
provided in-kind support, and the percent of the budget.
in-kind support.
US Embassy and Comic Relief have
provided funding.

Source: ICT = information and communications technology; MSMEs = micro, small, and medium enterprises; NTBC = National Technology Business Center;
SME = small and medium enterprise; USAID = United States Agency for International Development; ZDA = Zambia Development Agency; ZICTA = Zambia
Information and Communication Technology Authority.

38 A C C E L E R AT I N G D I G I TA L T R A N S F O R M AT I O N I N Z A M B I A
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