News broke at the end of January that the Government had increased electricity tariffs for the mining sector to $10.35c per Kwh. Mining firms consume about 55% of electricity generated in Zambia at rates of as low as $5.6c per Kwh. They weren’t subject to the December 2015 raise which was reversed (for now!) in January 2016.
2015 started off with a bang – a tightly contested and peaceful presidential by-election coupled with the economic stimulus of a reduction in fuel pump prices. One can be forgiven for thinking things could only get better from there. Unfortunately, that was not the case.
Here is a recap of some of the factors that shocked the Zambian economy and their subsequent effects:
Copper, the country’s main foreign exchange earner (accounts for 70% of earnings), saw its price drop by 25% to end the year at about $4,701 per MT as a result of a slowdown in Chinese demand:
Finance Minister Releases the 2016 National Budget
Mr. Speaker, in 2016, Government proposes to spend K53.14 billion, representing 25.8 percent of GDP. This will be financed through domestic revenues of K42.11 billion and grants from co-operating partners of K550 million. Financing will comprise K6.07 billion in net external financing representing 2.9 percent of GDP and net domestic borrowing of K1.75 billion representing 0.9 percent of GDP. Amortisation is projected at K2.66 billion. (Download full document)
Trying to decipher this puzzle that is Zambia by using a variety of publicly available data (structured and unstructured) in conjunction with my own skill/experience. * * *