Novi Weekly Wrap - July 27 Edition

African Development Bank (AFDB) president pays Zambia a visit

African Development Bank (AFDB) president Donald Kaberuka was in Zambia last week to inspect the ongoing works on a few of the diverse projects that the bank has had a role in funding. The project sectors rang from agriculture to infrastructure.

Source: Donald Kaberuka's twitter account

The $259m Kazungula Bridge (infrastructure) and $142m Itezhi Tezhi power plant (energy) are among the most notable projects that have been partly financed by the AFDB. The former is set to address the current challenges (among other benefits) faced by truck drivers who wait up to a week to cross the Zambezi River using a 50 year old pontoon on the trade route. The bridge will improve the efficiency and cost of cross-border trading in the region. The latter will inject 120MW of electricity into Zambia’s grid when operational.

Source: Donald Kaberuka twitter account

Kaberuka also visited Kariba dam which is in urgent need of rehabilitation which will cost in the region of $250m. There hasn’t been a lot of activity on the fundraising front for the repairs but could Donald Kaberukas visit give it the impetus it has been missing? Zambia and Zimbabwe are far from cash-rich right now and will require every bit of help that they can round up in order to get the required works on the dam done as soon as possible.

Government suspends issuance of trading licenses to oil marketing companies

The government suspended the issuance of trading licenses to oil marketing companies and new fuel service stations in order to “enable it to take stock of the efficacy of the companies operating in the country”. The government also suspended the issuance of operating licenses to foreign truckers engaged by oil marketing companies to transport fuel in the country – current contracts will be let to run until completion. This comes a month after the Energy Regulation Board (ERB) shut down 12 service stations belonging to several oil marketing companies for failing to adhere to ERB technical standards.

 This is a strong move by the government because this is a sector which requires stringent regulation. The banning of foreign truckers from transporting fuel on behalf of oil marketing companies is clearly a protectionist move which will favor local transporters. The question has to be asked though – are there enough well skilled and organized local transporters to take up all the business that will be taken away from foreign trucking companies? If this is not the case, oil marketing companies and eventually consumers will end up suffering from a lack of efficiency as well as potential increase in costs that could be brought about by this move. Having said that, this is a huge opportunity for skilled and organized local companies to immediately take advantage of.

The LuSE all-share index closed Friday at 6,137 points. LME copper closed Friday’s session at $7,180 per MT. The Kwacha was trading at K6.15 against the US dollar.