By Lumbiwe Mwanza
THE Government should pay particular attention to tackling challenges arising from high interest rates by the banks to reduce the cost of doing business and the cost of living in the country, the Crushers and Edible Oil Refiners Association (CEDORA) has said.
Zambia is a significant player in soya beans production and processing with demand largely driven by a fast-growing poultry sector. Zambia’s soya bean is mostly used as an industrial crop. It is used in oil production and in products such as soya chunks and soya meal.
The by-product (cake) is fed directly to animals or processed with other ingredients into animal feed stock. As an animal feed, soya by-products provide relatively low cost, high quality protein to feed rations.
Speaking in an interview, CEDORA Director Aubrey Chibumba said that as much as the growing demand of soya offers significant opportunity for smallholder farmers to improve their cash base, the cost of production and business in the country continued to limit agribusinesses.
Dr. Chibumba said that the interest rates levels in the country were too high for agribusiness players.
“In an economy, the main signs of whether the economy is going to improve or not are the interest rate levels because these levels indicate what expectations are for the market in the value of money. So this simply means that if the banks are charging 25 percent interest, then any business that you do in the country must give a return of at least 50 percent because the 25 percent you pay to the bank as interest.
Now, where in the world would you find a business that will instantly give you a return of 50 percent? Therefore, the high cost of business in this sector and any other sector is not because of licenses but because of high interest rates,” Dr. Chibumba lamented.
He added that lowering tax rates could also encourage banks to reduce interest rates and make money more affordable to borrow for businesses and that higher tax rates decreased the tax base, which led to the decrease in tax revenues even if the tax rates were high.
He said that by identifying and lowering high taxes, there could be a boost in local and foreign investments resulting in more output, higher employment, better standards of living, and improved productivity.
He urged the Government not to relent towards addressing the high cost of doing business in Zambia as a way of supporting entrepreneurship in various sectors.
