Economic empowerment beyond access to finance

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“A NATION OF ECONOMICALLY AND EQUITABLY EMPOWERED CITIZENS”

TOPIC: ECONOMIC EMPOWERMENT – BEYOND ACCESS TO FINANCE

Thursday, 22nd July, 2010 1

Historical Background Cont’d• In 2005 a Citizens Economic Empowerment

Advisory Committee comprising public andprivate stakeholders was appointed .

• Tasked with the responsibility of developing acomprehensive empowerment policy that wouldensure equity and empowerment of Zambiancitizens as they engage in sustainable economicactivities.

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Historical Background Cont’d

The Citizens Economic Empowerment AdvisoryCommittee, in developing a comprehensiveempowerment policy, took into account:

• The achievements and failures of past policiesaimed at empowering citizens

• Lessons learnt from these past experiences• Lessons learnt from other countries who have

engaged in a similar programs.

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Citizens Economic Empowerment Act

• In 2006 the Citizens Economic Empowerment (CEE) ActNo.9 was passed.

Objectives of the CEE Act

• Establishment of the Citizens Economic EmpowermentCommission (CEEC)

• Establishment of the Citizens Economic EmpowermentFund (CEEF)

• Promoting the empowerment of targeted citizens• Promoting investment through fostering joint local and

foreign ownership of companies6

What is Citizens Economic Empowerment?

• An integrated broad based and multifaceted strategy aimed at substantially increasing the meaningful participation of targeted citizens and companies in the economy and decrease income inequalities.

• Citizens Empowerment goes beyond participation of citizens; in addition to participation it includes psychological sense of ownership and actual control of economic power.

• Empowerment is a process and we have to continue building on it.

Description of targeted Citizens

Who is a targeted citizen?

• “A person who is historically marginalised ordisadvantaged and whose access to economicresources and developmental capabilities have beenconstrained due to various factors including race,sex, educational background, status and disability”

Who is eligible to access empowerment?

Broad based economic empowerment,

means economic empowerment of:

• Targeted citizens• Citizens influenced companies• Citizens empowered companies• Citizens owned companies

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FUNCTIONS OF CEEC

• To coordinate and implement empowerment programmes for targeted citizens.

• To substantially increase the meaningful participation of targeted citizens and companies in the economy in order to decrease income inequalities.

• Ensure economic empowerment of targeted citizens; citizens influenced companies, citizens empowered companies and citizens owned companies.

PILLARS OF EMPOWERMENT

1. Equity/Ownership, Management and Control

Citizen Influenced (5 – 25%, CitizenEmpowered (25-50%), Citizen Owned(50%+1)

2. Preferential ProcurementAt least 50% of Government and PrivateSector expenditure [over the next five (5)years] should go to empowered companiesand that at least 30% of these suppliercompanies be controlled by targetedcitizens

3. Skills DevelopmentImprove education and enhance ability toadopt modern business practice

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PILLARS OF EMPOWERMENT Continued

4. Access to FinanceEstablish the Citizens EconomicEmpowerment Fund, a special purposevehicle to finance CEE.

5. Transformation of SocietyTo provide supportiveculture, entrepreneurship for sustainableCEE

6. Corporate and Social ResponsibilityEncourage companies and communities topartner and uplift communities

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PILLARS OF EMPOWERMENT Continued

7. Good Political and Corporate GovernanceCreation of predictable legislation andregulatory framework for transparency andaccountability

8. Greenfield InvestmentsPromote investments and partnershipsbetween local and foreign investors

9. Foreign Direct InvestmentEncourage a foreign and local partnershipapproach to achieving CEE

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POLICY INSTRUMENTS

. Land Ownership

30% to be controlled by targeted Citizens by 2017;Leverage citizens’ participation in joint-ventures

2. Empowering Disadvantaged Groups

Youths, Women, disabled and Citizens living withHIV/AIDS increased participation in economicactivities and opportunities without discrimination

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POLICY INSTRUMENTS Continued..

. Sustainability

The need for the broader economy tomeet the needs of enterprise andcitizens in a sustainable manner

4. Lock in Mechanism

The need to develop a strategy to lock-in investment funds for a reasonableperiod to ensure growth andsustainability

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POLICY INSTRUMENTS Continued..

Rural Economic Development– Encourage collective enterprises as a way offacilitating ownership of assets by rural communities

– Introduce incentives to attract firms to operate inremote areas

– Introduce specific and targeted programmes for ruralareas

6. Supportive Culture– Need for CEE companies to have champions fromtop to bottom as path finders for CEE

– Quick payment to suppliers on the part of Govt.particularly SMEs

– Need for a mind-set change

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POLICY INSTRUMENTS Continued..

7.Regulatory and Institutional Framework

–Alignment of other Acts with CEE Act

–CEEC collaboration with otherorganisations

8. Financing

– Establishment of the EmpowermentFund

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The Role of CEEC - General

• Partnerships with Private Sector, Civilsociety and all other Stakeholders

• Measurement and monitoring of CEEPerformance

• Harmonization and review of variousLegislation

• Promotion of savings and repaymentculture

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Empowerment Fund

• One of the key pillars that has been identified as crucial to achieving economic empowerment is pillar that addresses issues of access to finance.

• The CEE Fund is established under Section 29 of the CEEC Act. The primary purpose of the fund is to support broad based economic empowerment programmes.

Product Development

• The CEEC will continue developing products that meet different segments of citizens e.g ChilimbaMarket product and Working Capital finance product.

• Some of the products that have been developed include;

- Creation of value chain and market linkages strategies in agri – business in rural areas, e.g Cashew Nut project in Western Province and Luwaka in North- Western.

- Dairy farming product

- Rural Service stations

- Chilimba market product

- Graduate Empowerment Programme *

THANK YOUFOR YOUR ATTENTION