PEPZ: Private Enterprise Programme Zambia

Project description / objective

The Private Enterprise Programme Zambia (PEPZ) was designed to build the capacity of Zambia’s private sector so as to create jobs and contribute to the diversification of the economy. Specifically, it aimed to create commercially sustainable and inclusive businesses with the potential to grow, generate investment and create jobs, especially for women and youth.

Market systems focus

Food & agriculture

Subsistence food production is dominated by smallholder farming and the significant majority of food purchases are made through informal markets. However, there is a growing commercial agriculture and formal retail sector, especially for Zambia’s middle class. Increasing demand for higher-value fruits and vegetables and for value-added food products is still primarily met through imports.  This creates substantial opportunity for investment and business growth within Zambia. 

Mining and mining services

The vast majority of mining manufacturing or maintenance services and inputs are imported, limiting the inclusiveness of Zambia’s mining sector. Increasing the local content in the mining value chain could generate significant value added in direct jobs and manufacturing output, contributing to Zambia’s economic and social development. 

Tourism and hospitality

Tourism has a high potential to create jobs, drive exports and generate prosperity in Zambia. However, the sector faces challenges such as: lack of a comprehensive national tourism plan; limited tourism product offering range and scope; and inadequate tourism promotion and marketing.
Improving coordination and information challenges is therefore key to realise Zambia’s tourism potential.  

Business services for investment and growth

Access to finance remains a key constraint for Zambia’s SMEs that want to grow their businesses. This is largely because Zambia’s financial institutions are not able to develop tailored, affordable financial products that address the financing needs of SMEs. In addition, limited knowledge and information on the potential of Zambian SMEs to absorb investment finance means that these firms are not able to access the large, untapped market of investment finance for Africa.   

Programme interventions

Food and Agriculture 

Promote input linkages in horticulture and legumes
Create competitive value chains in horticulture and legumes by supporting private sector business innovations that generate growth opportunities for SMEs through vertical and horizontal linkages. This included:

• Partnerships with aggregators to promote training for farmers, investment in warehouse infrastructure and increased market access
• Investment with agro-processors to develop High-Energy Protein Supplement (HEPS) products

Enhance off-taker linkages and value addition 
Build the capacity of SMEs in food value chains and create strengthened business linkages between producers, food aggregating and/or processing companies and the large supermarkets.  This included:

• Upgrading of breed stock, husbandry and pastures for commercialisation of goat production
• Tackling sector-wide issues such as certification and access to investment finance

Leverage rural investment
Leverage private sector investment in rural areas to incentivise rural economic activity and provide access to commercial products and services for rural communities.  This included:

• Co-investment in proving viability of Rural Enterprise Hubs (REH) with Zambia Cooperative Federation

Mining and Mining Services

Economic diversification
Strengthen and create sustainable non-mining value chains that have the ability to sustain economies in areas that are dominated by the mining sector. This included vegetable production & aggregation business models with women farmers.

Enhance local content
Promote the use of local goods and services in the Zambian mining sector by strengthening the capacity of local SMEs to provide such goods and services.  PEPZ developed a product-opportunity roadmap for local SMEs.

Tourism and Hospitality 

Strategic planning
Catalyse strategic planning and inclusive investment in Livingstone to increase its attractiveness and competitiveness as a tourism destination.  PEPZ helped private investors and public institutions create a ‘Destination Livingstone’ Board and develop a management plan to champion investment and coordinate activities.

Building capacity in the  craft sector 
Strengthen the capacity of businesses in the crafts sector so they can provide services to the tourism industry and make Zambia more attractive as a destination.  PEPZ worked with National Arts Council, Museums Board, private partners and crafts producer groups to strengthen the handcraft ecosystem and establish connections to international markets.

Business Services for Investment and Growth

Kickstart Zambia’s impact investment market
Stimulate the impact investment ecosystem in Zambia by demonstrating the investment readiness of Zambian SMEs.  Activities included:

• Working with NABII (National Advisory Board for Impact Investing) to raise awareness and build a cross-sector coalition for advocacy on regulatory reform
• Conferences in 2018 and 2019 with Impact Capital Africa to bridge relationships between investors and growth-oriented firms
• Piloting an impact investment fund in partnership with Zambia-based asset manager
• Launching a crowd-funding initiative for investment in social impact SMEs

Business to business linkages
Enhance the capacity of SMEs (local suppliers) to meet market requirements and connect to corporate buyers.  Activities included:

• Support to develop and commercialise the Zam B2B digital platform
• Support to 300 SMEs to strengthen management capacity & increase access to technology
• An annual business plan competition (Nyamuka Zambia) to promote investor awareness of innovative growth-orientated SMEs

Notable results (systemic change, poverty impact)

Food and Agriculture 

• Vegetable aggregators expanded their operations, secured additional retail markets. One partner acquired a new warehouse to support their new aggregation model with a significant increase of farmers.
• Agro-processors of High-Energy Protein Supplement (HEPS) increased their sourcing and processing capacity. The business model sourced from over 3,000 new smallholder farmers of which half are women. This had a positive impact on nutrition by introducing a new food supplement product for children sold in rural areas.
• A Goat Consortium with five commercial breeders reached over 1,600 small livestock farmers with sessions on goat production, breeding, business management and markets. Introducing new more resilient breeds to commercial breeders increased their goat tribes and expanded their market while farmers gained access to good-quality livestock.
• Zambia Cooperative Federation successfully established seven Rural Enterprise Hubs to offer services including mobile money, health services, educational services, agricultural aggregation, beverages and solar home systems. 200 micro-entrepreneurs were recruited to supply health services across seven hubs and have sold more than 15,000 units of simple health products within their communities. Off-grid energy connections were established connecting 42 MSMEs to solar grids and impacting over 2,000 people from surrounding communities.

Mining and Mining Services

• PEPZ engaged public and private stakeholders to develop a 'local product opportunity roadmap' to identify opportunities for creating domestic linkages that has been adopted by the Ministry of Mines and Minerals and successfully engaged two mining companies to test new models of engagement with local companies. 
• PEPZ developed a new legume supply chain by linking smallholder farmers to profitable off-taker market. A total of 200 farmers were pulled inside the market frontier with this intervention

Tourism and Hospitality 

PEPZ’s coordination efforts and extensive local stakeholder engagement resulted in the creation of a  Destination Management Board for Livingstone, established to champion the Destination Management Plan, prioritise and coordinate relevant activities, advocate for greater public sector collaboration with the tourism private sector and lead the way in supporting Livingstone’s growth and competitiveness. This has made Livingstone a more competitive destination. 

Business Services for Investment and Growth

• PEPZ’s support helped NABII become part of the Global Steering Group for Impact Investment (GSG); with Zambia only the second country in Africa to successfully join the GSG network.
• PEPZ supported a total of 28 SMEs in their investment preparation and capital raising efforts which were presented during the two ICA rounds and resulted in investment deals of a total volume of USD 80m to Zambian SMEs.
• The partnership with Impact Capital Africa (ICA) led to an investment pipeline for twelve SMEs that successfully raised between USD 50,000 and USD 16.5m each amounting to a total of USD 31.1m.
• PEPZ partnership with a Zambia based asset manager and impact investor successfully raised USD 1m for two local companies from four investors.
• The crowd-funding initiative raised over US$ 26,000 which confirmed that Zambians are willing to invest in local businesses.

Overall results

• Created 39,435 full-time jobs, including direct and indirect  (41 per cent of direct jobs for women)
• Generated £41,442,212 in additional investment
• Supported 25,726 MSMEs

[uploaded December 2020]
This programme ended in 2020