Economic growth slowed down to 3.7% in 2015 primarily due to the negative effects of prolonged load-shedding in the second half of the year as well as a significant decline in the currency.
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:
ZESCO Makes Their Case for November 2015 Electricity Tariff Hike
The Energy Regulation Board (ERB) has received an application from ZESCO to increase electricity tariffs for its various customer categories (excluding mining, high and low voltage export customer categories) for the year 2015. In its application, ZESCO proposed to increase electricity tariffs for retail customers (Residential, Services, Commercial and Maximum demand).
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Glencore Suspends Copper Mining at Katanga and Mopani Mines for 18 months
Glencore also said it had suspended copper production for 18 months from its Katanga operation in the Democratic Republic of Congo and its Mopani project in Zambia. The decision will remove about 400,000 metric tons of copper cathode from the market, Glencore said. Copper prices rose as much as 1.7 percent in London. (Read more)
Presidential Statement on Currency and Energy Challenges
Following the deterioration of the currency and energy situation in the country in recent months, His Excellency Mr. Edgar Chagwa Lungu, President of the Republic of Zambia has intervened to guide monetary and fiscal policy measures designed to stabilise the markets. (Read more)
Zambia set to end power tariff subsidies for large firms
Zambia's government will stop supplying cheap electricity to large industries as Africa's second largest copper producer battles a costly power shortages. The move away from subsidized electricity tariffs for large consumers will happen immediately, while state utility Zesco will source energy from private producers to plug the deficit, government spokesperson Vincent Mwale said.(Read more)
Zambia Starts Sale of $131 Million Stake in State Mining Company
Zambia, Africa’s second-biggest copper producer, began the sale of a 17 percent stake in its mining investment company that’s expected to fetch about one-billion kwacha ($131 million). An offer of about 27 million shares prioritizing Zambian investors opened Friday and closes Oct. 2, said Jimmy Mwambazi, corporate finance manager at Stockbrokers Zambia Ltd., which is managing the sale. (Read more)
LUSAKA, July 24 (Reuters) - Zambia has issued a $1.25 billion eurobond meant for infrastructure development at a coupon rate of 8.97 percent, a government statement seen by Reuters on Friday said. (Read more)
According to the President’s special assistant for PR, the government was looking to raise between $1.5 and $2 billion. An update from the Financial Times indicated that the offering started off with tepid demand at the beginning of the day but picked up significantly toward the end of the trading day with the order book exceeding $2.5 billion. The issuance coincidentally happened on the same day Goldman Sachs revised down their global copper price projections - in a week when commodities from gold to oil were down big!
Kwacha falls to record low against US dollar
The Zambian Kwacha (ZMW) fell 3.5% this week and hit a record low of K7.87 before settling at K7.85 to the US dollar:
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. * * *