19 February 2013

Zambia: Ceec's Value Chain Initiative Welcome

CHIKO Chilambo proprietor of Chipata Hatchery, will forever remain indebted to the Citizens Economic Empowerment Commission (CEEC) for boosting his business, which today stands out as the only hatchery in eastern province.

The business which started as a measure to address the shortage of poultry on the Zambian market acquired a loan of KR250,000 (K250 million) from the CEEC in 2010,

Mr Chilambo who has more than 5,000 layers and about 1,500 broiler chickens acquired the loan from the commission to expand his 42 hectare farm to include modern farm equipment.

He used the money to buy farming equipment from China which includes a setter, hatching machine, a generator as well as a delivery van.

These machines are used to ensure maximum benefit is achieved if the business of hatching eggs is to flourish.

The biggest challenge Mr Chilambo's hatchery is facing is resistance from bigger players in the poultry sector in terms of the consistent supply of eggs.

He claims that even his membership at the Poultry Association of Zambia, has not helped much because most of the eggs are produced and consumed in Lusaka, and therefore, all his major concerns as regards the supply of eggs tend to fall on deaf ears.

The ban on the importation on poultry products from neighbouring countries such as Malawi has also negatively impacted Mr Chilambo's business.

His efforts to exhaust other channels such as writing to the then Ministry of Livestock and Fisheries, has also proved futile because the end result tends to point towards the same major players in the sector, who have not been helpful to the growth of his business.

Another challenge threatening the expansion of Mr Chilambo's business is the huge costs involved in the purchase of parent-stocks (chicks which when grown, lay eggs for hatching). They cost as much as US$8 (about KR40) per chick.

"These parent-stocks are so expensive and for a young business such as mine, it is not so cost effective to take such a route, so most of our efforts seem to be in vein," he said.

It is because of challenges such as these that viable projects, which should be expanding and contributing towards economic development, are seemingly slugging.

Such challenges are the ones that CEEC director-general Likando Mukumbuta defines as a value chain constraint.

Mr Mukumbuta said the constraint arises when the commission funds a project and because of circumstances beyond the client's control, they tend to default in the repayment of the loan.

"We do not immediately resort to repossesing property from clients when they begin to default in payments, in fact, repossessing property is a measure of last resort, after we have exhausted all other channels of communication with the client,"he said.

"In instances such as the one affecting Mr Chilambo's business where the client is unable to proceed with the loan repayment as expected, we ask the client to write to the commission, so that we can evaluate what the client is telling us, and we map a way forward on how best the loan can be re-paid. This could sometimes even mean redesigning the project, in order to make it more viable by possibly engaging partners to the business," he said.

Mr Mukumbuta said in cases where additional funding of the project is the only solution to addressing the challenges affecting the business, the commission re examines the project, and where necessary, additional funding is considered to ensure sustainability of the projects.

Speaking during the official opening of the CEEC Value Chain consultative meeting for Eastern Province in Chipata recently, Mr Mukumbuta said the CEEC has repositioned its strategies to include value chain additions for sustainable growth.

Mr Mukumbuta said one of the latest strategies that the commission has adopted includes funding of cluster group sectors, as opposed to funding individual projects.

He disclosed that 90 per cent of the funding will now be concentrated in rural areas, with only 10 per cent in urban areas.

"The idea behind this is to ensure that rural areas are transformed into more modern communities. This now entails that 70 per cent of the funding will go towards the women and the young people, while the remaining 30 per cent would go towards the rest of the population,' he said.

He said the percentage of funding that will be channeled towards the youth is aimed at employment and entrepreneurship for young Zambians as a measure of increasing the country's export capabilities to other countries.

Mr Mukumbuta said part of the strategy the commission would employ would be to enhance its business advisory services such as engaging of business mentors to advise its clients on how to effectively utilise the funds in a sustainable manner.

"The most sustainable way to develop the economy is through investments into industry, hence we are encouraging private run industries as opposed to parastatals," he said.

Under the value chain cluster, we shall identify five industries in every province, and because the funds are aimed at all involved in the chain of the industry to flourish right from the production stage to the processing, we will have addressed most of the challenges affecting businesses in each province.

The five industries to be identified in every province will be based on the province's predominant capability. The industries we are targeting include agriculture, tourism, Information and Comminication Technology (ICT's), health education, just to mention a few.

"At the end of this programme, it is expected that every district in the country will have viable industries, in fact, through sustainable industrial growth, we are looking at creating a sustainable economy that can generate a labour shortage.

"This will be achieved by funding three districts per province per year, and therefore, preliminary works to identify the most viable industrial opportunities in each district of the country have already been completed, " he said.

Mr Mukumbuta explained that this entails that all businesses involved in the value chain of a specific industry will benefit from funding from the commission.

The idea behind of ensuring 90 per cent of funded projects in rural areas is to ensure that industrialisation is not only limited along the line of rail.

In Eastern Province for example, three viable agriculture industries were identified for 2013 funding, these include dairy farming in Chipata, cotton growing for Lundazi, and groundnuts farming for Petauke district.

Therefore, the value chain for dairy farming in Chipata district will entail that all industries that are directly linked or related to activities of dairy farming, qualify for possible funding.

"This means that we are targeting farmers who keep dairy animals and supply milk to a processing plant, the processing plant will also be funded to ensure that all the milk products, as well as its by-products are locally produced within the district. All those that intend to supply services and products related to the diary industry, are also eligible for funding by the commission, these may include suppliers and service providers," he explained.

This move is highly supported by the Zambian Government, which has reiterated its commitment in recognising the role that micro, small and medium enterprises play in facilitating development and creating jobs for the all citizens.

Eastern Province Minister Malozo Sichone said the economy in Eastern Province is largely dependent on agriculture and agribusiness.

He said the province has significant agro production which is largely from smaller traditional farms and smallholders.

He said Eastern Province is one of the highest regional producers of maize in Zambia accounting for between 25-30 per cent of national production.

The minister said there is sufficient cotton grown in the province with room for the establishment of a viable yarn spinning and textile industry.

"National statistics show that of Zambia's exports in cotton and tobacco, between 50-60 per cent comes from the eastern province, therefore production capabilities of tobacco are continuously increasing and investments in the cigarette manufacturing and tobacco auctioning would have sufficient raw material," he said.

He said Eastern Province's groundnut production is estimated to account for more than 40 per cent of national production, and that oil production from groundnuts, sunflower and soya beans is a growing industry worth investing in.

Mr Sichone said the significant contribution of agriculture produce from Eastern Province to national exports, places the province in a strategically advantaged position both in the short term from increased primary agriculture exports and in the long term for processed agriculture products.

The commission has also scored a number of other successes in the Eastern Province, in the hospitality, education and milling industry.

One such organisation is Nezzi Milling enterprise owned by Ishmael Mwale the business satared as a small milling company in 1991.

The core of this business is stockfeed production from a maize meal by product called number three meal.

Mr Mwale said the funding from CEEC was aimed at assisting his business produce stockfeed which is bought mainly by small-scale poultry famers in the province.

"We also mix the feed for the farmers. As we go on one of the ideas is to ensure that Eastern Province is self-sufficient by having locally produced stockfeed. Currently almost 100 per cent of stock feeds come from Lusaka. Our targets include outlying districts Lundazi, Chadiza, Patauke, Mambwe and others," he said.

Nezzi Milling received a sum of KR184,000, which was used for the purchase of milling equipment as well as the building of an additional structure to house the stock-feed milling plant.

Eastern Comfort Lodge in Chipata, owned by Elvis Mhone, is yet another beneficiary of the CEEC funds.

Mr Mhone said CEEC has assisted him realise his dream of contributing to national development.

This project, which now employs about 18 people, received funding amounting to K250 million, which was used to complete installation of air-conditioning and the construction of a conference facility.

Mr Mhone's advice to the public on the importance of loan repayment is very precise.

"Zambians should learn to be responsible. At the time we were getting this money from the commission, it was made clear that it is a revolving fund this money should be paid back so that other Zambians can benefit. There should be an amount of sacrifice, to ensure others also benefit. We should appreciate that the interest rates from CEEC are so minimal compared with that from commercial banks, this is what motivated me to pay back," he said.

He had to make sacrifices such as enduring without a vehicle of his own, and was forced to use a bicycle until last year, when he finally purchased a vehicle.

Fortune Private School is owned by Evelyn Mwanza a retired teacher, who after 25 years of service opted for early retirement.

With the background of having been a teacher, she felt energetic enough to start a school of her own.

In the beginning, Ms Mwanza used to give tuitions on the veranda of her house.

After the overwhelming response and encouragement from the parents of the children she was coaching, the idea of starting a school was born. The first thought was to start with a nursery school.

This began in 2003, where she was the only teacher with about nine children, whilst continuing with the tuition center and the adult literacy classes.

From then on, each year that went by saw the addition of new classes, which called for more funds to expand the school.

This is what necessitated her to seek for funding from CEEC, this of course was after undergoing a number of teething problems in setting up the school, which today has 347 pupils, with about nine teachers

The funds were used for constructing additional classes and an ablution block, but because the construction works at the school have stalled, she is one of the beneficiaries, who are looking forward to receiving additional funding from the commission upon repaying the loan, so that she can give the school a facelift.

Prior to getting funding from CEEC, she contacted a good number of non governmental organisations and other financiers.

The school received K231 million, which was used for the construction of a one by three classroom block, and the construction of an ablution block for both pupils and staff.

Undoubtedly, with business mentorship programmes and the newly introduced value chain funding, the CEEC's vision to contribute to the growth of industrialisation in

Zambia, will guarantee a milestone achievement.

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