Zambia’s slower macroeconomic environment since 2015 and elevated interest rates has both eroded consumer purchasing power and kept vehicle financing costs high. Zambia’s long-term economic growth potential is high given its relatively stable political environment and generally business-oriented regulations for the region. However, the Zambian government’s high debt burden, including arrears to government contractors, will continue to weigh on the private sector and slow economic growth in the short- and medium-term.
There is a high demand for second hand motor vehicles and spare parts. These second hand vehicles are imported from Japan, Germany, the United States, United Kingdom, Singapore and United Arab Emirates. In the past ten years, Zambia has seen an increase in the number of companies trading in second hand vehicles and spare parts. These vehicles are mostly right-hand drive, although medium and heavy duty trucks from the United States and Europe are not uncommon.
U.S. auto exports to Zambia have steadily declined in the last five years, but began to regain momentum in 2016. Zambia continues to be a promising market for U.S. auto parts; the top auto part imports from the United States include: radial tires, parts and accessories for suspension systems, parts for diesel engines, oil filters, brakes, and fuel pumps.
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Market Entry & Barriers
Entering the market will require local expertise on legal and regulatory issues. Building relationships with key agency representatives such as transporters and car dealers will maximize prospects for successful market entry. U.S. companies usually either license through local representatives or export indirectly through intermediaries. Right hand drive vehicles have a larger market than left hand drive vehicles.
There are no trade restrictions on the import of vehicles and automotive components from the United States, other than standard import duties. As a landlocked country, the overall cost of importation may be higher because of the lack of direct access and distance to the nearest ports. These costs may vary depending on vehicle size, so it is necessary to ask clearing agents about the specific cost for each imported vehicle. The Zambian Revenue Authority (ZRA) subjects all imported motor vehicles to inspection and importers must provide proof of payment of tax and duty. More information on importation requirements can be found on the ZRA website: https://www.zra.org.zm. Duties can be paid in advance to facilitate importation through the Zambia Revenue Authority. Many companies avoid duty payment if the vehicle is considered capital equipment imported during the first few years of new investment. It is important to check the latest regulations from ZRA.
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