Zambia Corruption Report

Companies contend with a high risk of corruption, particularly petty corruption, when dealing with Zambia’s police. The government has indicated that corruption in the police is very common (ICS 2017). In effect, half of Zambians consider the police to be corrupt, and a quarter of those who came into contact with police officers in the preceding twelve months paid a bribe (GCB 2015). Businesses have insufficient confidence in the reliability of police services to enforce law and order, yet do not report high business costs due to crime (GCR 2017-2018). Three out of five companies pay for private security (ES 2013). While civilian authorities maintain effective control over the security services, corruption in the police is fueled by a high degree of impunity (HRR 2016). The police frequently extort money and goods from drivers at roadblocks (FitW 2017; HRR 2016). There have been calls to disband the current traffic police due to the endemic levels of corruption (Lusaka Times, Jun. 2017).

There is a high risk of corruption in Zambia’s land administration. Zambia’s land administration is one of the most corrupted institutions in the country (ZBPI 2014). Property rights are generally adequately defined in urban areas, unlike in rural ones (BTI 2016), but the implementation of these rights faces many practical challenges (ICS 2017). Property rights enforcement in the courts is weak and court decisions can take a long time to be finalized (ICS 2017). Land titles are sometimes questioned and re-titled to another owner (ICS 2017). Expropriation, with compensation at a fair market rate, is allowed under Zambian law, however, the procedure to establish fair market value is ill-defined (ICS 2017). Leased land, for which 99 year leases are granted, may revert to the government if it is established that the land has remained undeveloped after a certain amount of time (generally five years) (ICS 2017). Allegations exist that persons with political connections use their clout in illegal land dealings (Zambia Daily Mail Limited, Jul. 2017).

The amount of steps required to register property in Zambia is in line with the regional average but the time required to register property in Zambia is less than the regional (DB 2017).

There is a high risk of corruption when dealing with Zambia’s tax authorities. Irregular payments and bribes in the tax administration are common (GCR 2015-2016). One in ten companies expect to offer gifts in meetings with Zambian tax officials (ES 2013). A third of Zambians consider most or all tax officials to be corrupt (GCB 2015). Tax rates are identified among the main obstacles for foreign companies in the Zambian market (GCR 2017-2018). On a more positive note, the Zambia Revenue Authority (ZRA) has increased its effectiveness, leading to higher government revenue (BTI 2016). State-owned enterprises (SOEs) and private companies are subject to the same tax regime (ICS 2017). Companies face significantly fewer tax payments and spend significantly less time each year on filing taxes compared to the regional average (DB 2017).

Allegations of large-scale corruption involving the ZRA have been logged by the President of the United Progressive People party. It is alleged that the ZRA inflated the cost of a contract from ZMK 84 million to ZMK 140 million in a corruption scheme presumably involving embezzlement and misappropriation of funds (Lusaka Times, Apr. 2017).

Zambia’s customs administration carries a high risk of corruption. Irregular payments and bribes are common (GETR 2016). The efficiency of the customs clearance process and the time predictability of import procedures are rated as poor by companies (GETR 2016). Burdensome import procedures, tarriffs, and corruption at the border are cited as the most problematic factors for trading across borders in Zambia (GETR 2016). Import and export bans on commodities are announced in an unpredictable manner (ICS 2017). The cost of border compliance for import procedures in Zambia is only around half of the regional average, but procedures take slightly more time than elsewhere in the region (DB 2017).

In 2014, several truck drivers were killed by customs authorities for refusing to pay bribes when crossing Zambian borders. Trucks are regularly attacked and ransacked when waiting in a queue to cross the border (Africa-News, Feb. 2014).

Corruption is pervasive in Zambian government procurement presenting companies operating in the sector with high risks (ICS 2017). Businesses report that bribes and irregular payments are common when bidding for public contracts (GCR 2015-2016). Almost a third of companies indicate they expect to give gifts to secure government contracts (ES 2013). Both the diversion of public funds and favoritism in decisions of government officials are common (GCR 2017-2018). Fraud in the tendering process for government bids is widespread and often occurs during vendor selection, contracting and maintenance (GECS 2014). Transparency and accountability is particularly lacking in the last stages of the procurement process, which leaves significant room for manipulation (GI 2017). Private companies are able to compete with state-owned enterprises (SOEs) under equal terms when it comes to access to markets, credit, and other aspects of business operations such as licenses and supplies (ICS 2017). However, SOEs are not subject to the Government Procurement Agreement and are able to procure their own goods and services freely (ICS 2017). Payments for procured goods and services are processed without following procurement procedures due to failure to comply with regulations and the weak implementation of internal control systems (GECS 2014). Suppliers are known to inflate their prices far beyond market values, pointing at likely collusion between government officials and suppliers (Daily Mail Limited, Sept. 2017).

The risk of corruption in Zambia’s defense procurement sector is very high (GDACI 2015). Zambia has created the Zambia Public Procurement Authority, to counteract corruption in the public procurement sector. Corruption in procurement remains rampant, but the introduction of an electronic procurement system, slated to be introduced in December 2017 is hoped to help curb corruption in the sector (B&FT Online, Jul. 2017). Another area with high risks of procurement fraud is road construction; a government minister was allegedly fired over his role in a corruption case involving road construction contracts worth USD 30 million (The Citizen, Nov. 2016). In another instance, suspicions were raised about a ballot paper printing contract granted to a company based in the United Arab Emirates, which printed the ballots for the August 2016 general elections. The company was not the lowest bidder and no other reason was given for picking a bidder whose price was higher than the firm which printed ballots for previous elections (GI 2017).