Zambia’s 2026 National Budget, unveiled in September 2025 by Finance Minister Dr. Situmbeko Musokotwane, signalled a renewed push toward industrialisation. The manufacturing sector remains a key focus of Zambia’s industrialisation agenda, with the Budget outlining ongoing investments in infrastructure, policy reforms and fiscal incentives, aimed at enhancing local production and value addition.

Newly proposed fiscal and customs incentives intended to support domestic manufacturing include the removal of customs duty on complete knock down components for vehicle assembly, including electric vehicles, tractors and trailers. This is aimed at encouraging the assembly of motor vehicles and foster growth in Zambia’s automotive industry.

The Minister also proposed to remove the 5% surtax on selected goods applicable to flat rolled products of iron or non-alloy steel, painted, varnished, or coated with plastics. This is intended to lower output costs and enhance manufacturing efficiency.

In the agricultural value chain, specifically the dairy sub-sector, the Minister proposed a series of measures. These include higher duties (15% to 25%) on powdered milk, cheese, yoghurt, UHT, the harmonisation of a 0% surtax, the removal of duty on pasteurisation machinery, and extending the 2% local-content allowance to income earned from value addition to milk, raw hides and skins.

In the automotive industry, the Minister proposed to reduce the excise duty on new hybrid vehicles to 15% from 30% to promote the use of environmentally friendly vehicles in line with the Government ‘s policy of reducing greenhouse gas emissions.

The Minister also proposed the removal of the 5% surtax on selected goods applicable to flat rolled products of iron or non-alloy steel, painted, varnished, or coated with plastics to lower output costs and enhance manufacturing efficiency.

The manufacturing sector is expected to benefit from a combination of protective tariffs, targeted incentives and infrastructure expansion. The development of new economic zones presents opportunities for greenfield investment, while the revival of strategic facilities such as Mulungushi Textiles may catalyse growth in agro-processing and light industry.

Businesses operating in agro-processing, automotive assembly and light manufacturing are stepping in to a landscape ripe for growth, subject to compliance with evolving regulatory frameworks.

Written by Bwalya Chilufya-Musonda and Joshua Mwamulima, Partners, and Mwansa Nachula and Precious Mwansa-Chisha, Associates, Bowmans Zambia