The Zambian Public Procurement Authority issued a notice in in 2011 (that came into effect on the 15th of April, 2011) that said the following
Procuring Entities shall be guided by the Citizens Economic Empowerment Commission certification that shall be issued to bidders categorized as Citizen influenced, Citizen empowered, and Citizen owned companies.
In evaluating bids, Procuring Entities shall apply preferential treatment for bids or tenders that are categorized as National bidding and Selection, Limited National bidding and selection, International bidding and selection, as well as Limited international bidding and selection.
Evaluation of bids for preferential treatment is to be done by
bidders (attaching) CEEC registration certificates when submitting bids or tenders.
CEEC registration certificates? We've known about CEEC for a few years now, but it was more about financing and the like. As it turns out Zambia has been watching South Africa very closely and have published their own DRAFT (forgive the uppercase) Codes of Good Practice on Broadbased Citizens Economic Empowerment (published in April 2011). The codes are very influenced by South Africa's BEE codes. For example empowerment is defined as
An integrated broad-based and multi-faceted strategy aimed at substantially increasing meaningful participation of targeted citizens, citizen empowered companies, citizen influenced companies and citizen owned companies in the economy and decrease income inequalities.
Which is very similar to the definition contained in our legislation. In fact the Zambians are so impressed with our codes of good practice they have closely aligned their scorecard to South Africa's COGP (with a smattering of our Financial Sector Charter).
The policy attempts to include more Zambians into the economy. Zambia appears to quite similar to Namibia in that Zambians don't appear to have that much control over their own economy, it's in foreign hands. The codes explain it in a little more detail
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jobs are taken up by foreigners even where local citizens are capable of doing (that job).
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Perceived poor performance among Zambian contractors
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Loss of mining sites by small scale miners to foreigners as they are staked as collateral to borrow from foreigners.
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Prime business areas owned by foreign nationals.
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Formation of cartels that push the indigenous Zambians out of business
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Exorbitant rentals in prime business areas working to the disadvantage of citizens
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Remuneration disparities between local and foreign workers.
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Locals' participation dominantly in primary commodities – lack of value addition.
Beneficiaries
The primary beneficiaries are targeted Zambian citizens. Citizenship refers back to the Zambian Constitution which states
(1) Every person who immediately before the commencement of this Constitution was a citizen of Zambia shall continue to be a citizen of Zambia after the commencement of this Constitution. (2) A person who was granted citizenship of Zambia before the commencement of this Constitution subject to the performance of any conditions following the happening of a future event, shall become a citizen upon the performance of such conditions.
'Targeted citizens', are "(those) who are historically marginalized or disadvantaged and whose access to economic resources and developmental capabilities has been constrained due to various factors including race, sex, educational background, status and disability". Not quite black and not very specific.
Scorecard
To achieve they have developed a scorecard which is a combination of South Africa's codes and Financial Sector Charter. There are two scorecards
A generic type that does not apply to Micro, Small and Medium Enterprises (MSMEs)
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Element
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Rank
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Weight
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Equity, Ownership, Management and Control
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1
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20
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Preferential Procurement
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2
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20
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Skills Development
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3
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15
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Access to Finance
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4
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15
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Employment Equity
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5
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15
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Enterprise Development
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6
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10
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Corporate Social Responsibility
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7
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5
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TOTAL
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100%
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The elements are ranked in terms of their importance.
A generic type that does not apply to Micro, Small and Medium Enterprises (MSMEs)
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Element
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Rank
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Weight
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Equity, Ownership, Management and Control
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1
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40
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Preferential Procurement
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2
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30
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Skills Development
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3
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30
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Access to Finance
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4
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30
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Employment Equity
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5
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30
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Enterprise Development
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6
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30
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Corporate Social Responsibility
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7
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30
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TOTAL
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100%
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The MSME scorecard makes ownership compulsory along with compliance of any two other elements.
MSME
The term MSME is not defined in the code. The definitions below come from a policy document published in 2008. An exchange rate calculator can be found here. As of today (2 April, 2012), 1 US$ will get you 5,270.00 ZMK.
To qualify as a small micro or medium enterprise under the above mentioned categories, the legal status and total investment criteria must be met together with at least one other criterion. In each case (other than informal enterprises the business must be registered with the Registrar of Companies.
Micro Enterprises
A micro enterprise shall be any business enterprise;
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Whose total investment excluding land and buildings shall be up to Eighty Million Kwacha (K80, 000,000).
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Whose annual turnover shall be up to One hundred and Fifty Million Kwacha (K150,000,000).
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Employing up to ten (10) persons.
Small Enterprises
A small enterprise shall be any business enterprise larger than a small enterprise
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Whose total investment, excluding land and building - In the case of manufacturing and processing enterprises, shall be between Eighty Million and Two Hundred Million Kwacha (K80,000,000 – K200, 000,000) in plant and machinery. - In the case of trading and service providing enterprises shall be up to One Hundred and Million (K150,000, 000) Kwacha.
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Whose annual turnover shall be between One Hundred and fifty Million and Two Hundred and Fifty Million (K151,000- K300,000,000) Kwacha.
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Employing between eleven and forty nine (11- 50) persons.
Medium Enterprises
A medium enterprise shall be any business enterprise larger than a small enterprise
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Whose total investment, excluding land and building; - In the case of manufacturing and processing enterprises, shall be between Two Hundred Million and Five Hundred Million (K201,000,000 – K500, 000, 000) Kwacha in plant and machinery. In the case of trading and service providing shall be between One Hundred and Fifty One Million and three Hundred Mullion (K151, 000,000 – K300,000,000) Kwacha.
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Whose annual turnover shall be between Three Hundred Million and eight Hundred Million) (K300,000 ,000 - K800,000,00).
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Employing between Fifty One and One Hundred (51 -100) persons.
Informal Enterprise
An informal enterprise shall be any business enterprise not registered with the Registrar of Companies;
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Whose total investments excluding Land and Building shall be up to Fifty Million (K50, 000,000) Kwacha.
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Employing less than Ten (10) persons.
Implication of the CEEC score
Each company is graded in the table below.
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Large Companies
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MSMEs
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Excellent
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100%
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80% and above
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Good
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75%- 99%
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65% - 79%
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Satisfactory
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50% - 74%
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40% – 64%
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Limited
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Below 50%
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Below 40%
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The higher the score the better the chance that your company would be considered for the following (when doing business with state institutions and agencies):
- To select companies to enter into partnerships with.
- To select companies to conduct business with.
- To be used as eligibility criteria for the participation in preferential procurement and reservation schemes.
- To grant license renewal.
Verification
This is done every THREE years, and is performed by agencies that will be appointed by the CEEC Commission.
Status of the CEEC Codes
It appears that the codes are still in draft form. This note informs us that they were to be gazetted in February this year, but the literature on the various websites still seems to refer to the codes as draft.