Last Thursday's K450 million ($47m) Treasury Bill (T/bill) auction attracted K1.1 billion ($120m) in bids as yields fell for the second auction in a row:
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:
August Inflation Quickens to 7.3% as Trade Deficit Contracts
August inflation ticked up to 7.3% from 7.1% the previous month. The upward move was led by an increase in the prices of non-food items such as fuel and transport fares and fees. The Government raised the pump price of fuel by an average of 13% in July whereas road user fees (road tax, license renewals etc.) were also raised by 50%.
The trade balance came in at a deficit of K958 million in July, down 20% from the previous month. This was the first contraction in the trade deficit this year.
Atlas Mara in talks to buy Finance Bank Zambia
Atlas Mara Ltd., the company co-founded by Bob Diamond to invest in African financial businesses, is in talks to buy Finance Bank Zambia Plc, according to three people with knowledge of the matter. Negotiations began as early as March, two of the people said, asking not to be identified because they’re not authorized to comment on the talks. (Read more)
Zambia experiences country-wide power outage after system failure
A fault at Zambia’s Kariba North hydropower station Monday caused a blackout across most of Africa’s second largest copper producer and cut supplies to large parts of Zimbabwe.(Read more)
Inflation falls to 7.4% as trade deficit widens
Data released by the Central Statistics Office (CSO) showed that inflation fell to by 0.3% from the previous month to 7.4% in February 2015. The decrease was driven by a drop in non-food inflation. This is the third consecutive drop in the inflation rate since it hit a high of 8.1% in November 2014.
The Central Bank kept the policy rate unchanged at 12.5% until the next decision in May 2015. They cited the slowdown in China’s growth as a key component in the policy rate decision because it has a negative impact on global copper prices which in turn has a downward effect on the Kwacha and consequently inflation. This is the first policy rate decision since last month’s election.
2015 has started off in stark contrast to the previous year - January inflation slowed down for a second month in a row to 7.7 percent. According the Central Statistical Office (CSO), the slowdown was driven by a decline in food as well as some non-food prices.
Energy Regulation Board reduces pump price of petroleum products
The Energy Regulation Board (ERB) reduced the pump prices of petrol, diesel and kerosene by K0.25, K0.38 and K0.27 per liter, respectively while wholesale prices were cut by 3.66%. The changes took effect yesterday at midnight. The new pump prices of petrol, diesel and kerosene per liter are K10.48, K9.73 and K7.21, respectively. Global oil prices have fallen by over 27% over the last 5 months and yesterday Brent crude traded below $70 per barrel for the first time since 2010.
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. * * *