Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
The government of Zambia has amassed a substantial debt burden from both internal and external sources, and is currently in default on the majority of its debt owed to international commercial creditors. As such, caution is required, and due diligence is recommended, when doing business with the Zambian government. Potential public procurement opportunities include renewable energy, which is an alternative to hydro power energy that the country currently depends on, health care support services, and infrastructure development. The current government is mainly interested in Public-Private Partnership (PPP) or Build-Operate-Transfer project models, either solicited or unsolicited.
Government procurements valued over K500 million ($30 million) are advertised in local newspapers and through e-procurement systems; competitive factors include price, quality, training, and after-sales service. Open bidding or selection is used for goods and services costing over K500 million ($30 million). Bidding documents are available upon payment of a non-refundable fee. Invitations to bid have a minimum floatation period of four weeks for national tenders and six weeks for international tenders; sealed bids are deposited in a tender box. The public is invited to attend the tender closing and bid opening ceremony. Bid evaluation is based on the criteria provided in the bidding document. Contract award authorization is given either by the Procurement Committee or the Central Tender Committee depending on the level of authority held by the procuring entity. The best evaluated bid must be published before contract award, and then a formal contract document is signed. Once a contract is signed with the successful bidder, the procuring entity informs all other bidders that their bids have been unsuccessful and provides reasons for that decision.
For local procurements below K500 million ($30 million), three (3) competitive quotes are obtained via a Request for Quotations (RFQ) process. The RFQ is required to provide clear instructions on the conduct of the procurement process, including the preparation and submission of quotations, information on how quotations will be evaluated, and information on the contract award process. Suppliers are requested to submit quotations supported by their certificate of registration, ZRA Tax Clearance Certificate, and relevant sector certification. These are not published in the public media /or gazette, and the evaluation is based specification within the RFQ. The purchase is conducted via a Local Purchase Order.
Legal requirements for selling to the government are outlined in the Public Procurement Act No. 12 of 2008 and the Public Procurement Regulations of 2011, which provide a comprehensive regulatory framework for public procurement in Zambia. Zambia is party to the WTO Agreement on Government Procurement but is not party a bilateral free trade agreement with the United States.
The Zambian government finances some public works projects through borrowing from multilateral development banks. For more information on public procurement in Zambia, can be found through the Zambia Public Procurement Authority (ZPPA) website pages addressing Procurement Methods and their e-Procurement System.
U.S. companies bidding on Government tenders may also qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Given the Zambian government’s extensive debt and default status, project financing can be a challenge in the current environment. Besides bilateral and multilateral government agencies, commercial banks and venture capital funds are playing an increasing role. Both the United States and the European Union (EU) have established enterprise development funds, which can be accessed for projects in Zambia.
The United States Trade and Development Agency (USTDA), the U.S. International Development Finance Corporation (DFC), United States Export and Import Bank (EXIM), the International Finance Corporation (IFC), and British International Investment (BII) offer financial assistance for projects in Zambia.
There are no restrictions against U.S. companies’ participation in bids and tenders floated by the Zambia Public Procurement Authority (ZPPA) and funded by international institutions such as the World Bank, African Development Bank, and others. After selection of a successful bidder, the relevant government ministry will supervise the project while payments are made from the financing institution. However, channels for remittance of project funds will differ according to the financing institution.
Multilateral Development Banks and Financing Government Sales: Price, payment terms, and financing can be a significant factor in winning a government contract. Many governments finance public works projects through borrowing from the Multilateral Development Banks (MDB). A helpful guide for working with the MDBs is the Trade Finance Guide. The U.S. Department of Commerce’s (USDOC) International Trade Administration (ITA) has a Foreign Commercial Service Officer stationed at each of the five different Multilateral Development Banks (MDBs): the African Development Bank; the Asian Development Bank; the European Bank for Reconstruction and Development; the Inter-American Development Bank; and the World Bank.
Learn more by contacting the:
- Commercial Liaison Office to the African Development Bank
- Commercial Liaison Office to the World Bank
Additional Financing Web Resources:
- Export-Import Bank of the United States (EXIM)
- U.S. International Development Finance Corporation (DFC) | Formally OPIC
- U.S. Trade and Development Agency
- Small Business Administration’s Office of International Trade
- USDA Commodity Credit Corporation
- U.S. Agency for International Development (USAID)